“The forecasts that the oil market will re-balance in the fourth quarter have taken into consideration the rise in shale oil production,” he said. The rise in crude output from Libya and Nigeria is posing no threat as “the level of increase from these two countries is still within the limits set by the Algeria agreement of 500,000 barrels a day,” he told the Saudi-owned daily.
Libya’s oil production has reached about 900,000 barrels a day, according to a person with knowledge of the matter who asked not to be identified due to a lack of authority to speak to media. The politically divided country is currently pumping at its highest level in four years, data compiled by Bloomberg show.
Saudi Arabia and other members of the Organization of Petroleum Exporting Countries as well as producers from outside the group reached an initial deal in Algiers in September to cut production to curb the global glut and shore up prices. Libya and Nigeria were exempt from the deal when it was formalized later in the year. The six-month accord, which took effect on January 1, was extended until March next year.
OPEC and its partners in the cuts agreement don’t target a specific oil price, and volatility in the oil market is due to speculation, Al-Falih said.
Oil inventories on land and at sea are falling, he said. Oil stored on floating marine facilities are at their lowest since 2014 after falling by 50 million barrels, while inventories in countries in the Organization for Economic Cooperation and Development dropped by 65 million barrels a day from their peak in July 2016, he said.
Market watchers only look at U.S. oil stockpiles “where decline rates in inventories are less than expected,” and they neglect to recognize stockpiles have fallen elsewhere, he said.