An OPEC flag stands on the desk during a news conference at the Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria. (Photographer: Akos Stiller/Bloomberg)

Saudi Arabia Says OPEC Should Extend Cuts in Meeting This Month

(Bloomberg) -- Saudi Arabia’s Energy Minister said OPEC and its allies should announce an extension of their output curbs when they gather at the end of this month.

The Organization of Petroleum Exporting Countries is unlikely to reduce excess oil inventories to average levels by the time the current deal expires in late March, said Minister Khalid Al-Falih, speaking at the United Nations climate talks in Bonn, Germany. Russia, allied with OPEC in the deal, isn’t convinced it’s necessary to make a decision when the producers meet on Nov. 30, people familiar with the matter said this week.

“We need to recognize that at the end of March we’re not going to be at the level we wanted to be, which is at the five-year average,” al-Falih said in a Bloomberg television interview Thursday. “That means an extension of some sort is needed. My preference is to give clarity to the market, and announce on Nov. 30 what we are going to do.”

The kingdom has had “extensive” consultations with Russia, he said, and feels “fully convinced” that country will be “fully onboard” when a resolution is made.

Al-Falih also said that foreign investment in Saudi Arabia, including the planned sale of shares in its state oil company, will be unaffected by a series of arrests of officials. The arrests are “a very limited domestic affair, that the government is simply cleaning house for something that is way overdue,” he said.

OPEC will ensure that its “exit strategy” from the current accord will be a “gradual adjustment” that prevents the return of any glut, al-Falih said. The kingdom has particularly cut back exports to the U.S. during the accord as that market is especially oversupplied, and those cuts will be reversed once the agreement ends, he said.

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