Saudi energy minister recommends driving down oil inventories, says supply plentiful

By Rania El Gamal and Vladimir Soldatkin
JEDDAH, Saudi Arabia, May 19 (Reuters) - Saudi Arabia's
energy minister said on Sunday he recommended driving oil
inventories down and that global oil supplies were plentiful.
"Overall, the market is in a delicate situation," Khalid
al-Falih told reporters ahead of a ministerial panel meeting of
top OPEC and non-OPEC oil producers, including Saudi Arabia and
Russia.
He said the Organization of the Petroleum Exporting
Countries, of which Saudi Arabia is de facto leader, would have
more data at its next meeting in late June to help it reach the
best decision on output.
OPEC, Russia and other non-OPEC producers, an alliance known
as OPEC+, agreed to reduce output by 1.2 million barrels per day
(bpd) from Jan. 1 for six months, a deal designed to stop
inventories building up and weakening prices.
Russian Energy Minister Alexander Novak told reporters that
different options were available for the output deal, including
a rise in production in the second half of the year.
The energy minister of the United Arab Emirates, Suhail
al-Mazrouei, said oil producers were capable of filling any gap
in the oil market and that relaxing supply cuts was not "the
right decision".
Mazrouei said the UAE did not want to see an increase in
inventories that could lead to a price collapse.
Saudi Arabia sees no need to boost production quickly now,
with oil at around $70 a barrel, as it fears a crash in prices
and a build-up in inventories, OPEC sources said, adding that
Russia wants to increase supply after June.
The United States, which is not a member of OPEC+ but is a
close ally of Saudi Arabia, wants the group to boost output to
bring oil prices down.
Falih has to find a delicate balance between keeping the oil
market well supplied and prices high enough for Riyadh's budget
needs, while pleasing Moscow to ensure Russia remains in the
OPEC+ pact, and being responsive to the concerns of the United
States and the rest of OPEC+, the sources said earlier.
Sunday's meeting of the ministerial panel, known as the
JMMC, comes amid concerns of a tight market. Iran's oil exports
are likely to drop further in May and shipments from Venezuela
could fall again in coming weeks due to U.S. sanctions.
Oil contamination also forced Russia to halt flows along the
Druzhba pipeline - a key conduit for crude into Eastern Europe
and Germany - in April. The suspension, as yet of unclear
duration, left refiners scrambling to find supplies.
Novak told reporters that oil supplies to Poland via the
pipeline would start on Monday.

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