By Rania El Gamal
DUBAI (Reuters) – Saudi Arabia, other OPEC states and non-OPEC allies aim to stick to a global pact on cutting oil supplies until the end of 2018 but are ready to make gradual adjustments to offset any supply shortage, a Gulf source familiar with Saudi thinking said.
The oil producers participating in the output reduction deal are satisfied with the result of their agreement, which was due to end at the end of 2018, the Gulf source told Reuters.
The deal could be extended to achieve its objectives of keeping a balanced oil market, the source said, adding that, when needed, any rise in output would be “in a gradual and deliberate fashion.”
The Organization of the Petroleum Exporting Countries with Russia and several other oil producers agreed to cut output by about 1.8 million barrels per day (bpd) starting from January 2017. The curbs have driven down inventories and pushed up prices.
The producers have said they will keep the cuts in place until the end of 2018, but sources have told Reuters that Saudi Arabia and Russia were discussing the possibility of raising output by about 1 million barrels a day to cool the oil market.
OPEC meets next on June 22 to discuss oil policy.
However, the producers will continue working together, even if adjustments to the deal are made.
“Saudi Arabia, OPEC and non-OPEC … are continuing their cooperation this year and beyond, it is not something temporarily, it is going to be a long-term cooperation for the sake of a stable oil market,” the Gulf source said.
The source added that the oil market was moving towards balance and fundamentals were better than last year, “but the group is not ready yet to fully lift controls.”
(Reporting by Rania El Gamal; Editing by Edmund Blair)