Saudi Minister of Energy Khalid Al-Falih said OPEC and other producers are likely to gradually revive oil output in the second half of the year to ease consumer anxiety as prices trade near $80 a barrel, according to reports.
The action would be a reverse of course from previous OPEC and non-OPEC producers’ decision two years ago to throttle back output in order to erode a glut in supply and increase prices. Now that oil is hovering around $80 on international indices, external pressure is growing for increased supply to lower prices.
“I think in the near future there will be time to release supply” smoothly to avoid shocking the market, Al-Falih said at the St. Petersburg International Economic Forum in Russia, according to Bloomberg. When OPEC, Russia and other major producers meet in June “we will do what is necessary” to reassure consumers, the minister said.
His comments came after talks with Russian counterpart Alexander Novak, who “said the output increase would start in the third quarter, if it’s approved by other members of the group. Both men said the size of the boost was still subject to negotiation,” according to Bloomberg.
Major national consumers are watchful of energy prices heading into the Summer. Reuters reports that Al-Falih also spoke with China’s energy chief by phone on Friday to “discuss cooperation between the two countries and review the oil market.”
India, another Saudi trading partner that is slated to build a $44 billion crude-oil refinery in partnership with Saudi Aramco with a capacity to process 1.2 million barrels a day in the western Indian state of Maharashtra, is in the throes of its own oil problem in an election year as prices increase.
In the United States, where gas consumption soars in the summer months, prices may hit $3 a gallon on average nationwide, an increase from last year at this time, creating a potential political issue during U.S. midterm elections.
President Trump tweeted his annoyance with OPEC and other producers on increasing prices last week. “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”