Saudi Arabia continues to find itself in a heated battle with countries like Russia, Canada and the United States, for market share when it comes to oil. Yet comments from the Kingdom’s energy minister show that its influence is still felt among both OPEC and non-OPEC nations.
As a result of comments by Khalid al-Falih to the Saudi news agency SPA on August 11, the price of oil jumped roughly two percent the following day. While that completed a strong week in which an increase of approximately six percent was attained, the remarks seemed to signal a possible change of approach.
Those comments focused on the potential thaw between Saudi Arabia and other OPEC countries in their recently frigid relationship. It comes at a time when all oil producers are looking for ways to boost the plunging market of the past two years. Over that span, the price of a barrel of oil has been sliced by more than half.
The Saudis had previously rejected proposals by the organization to collectively reduce production in order to eliminate an oil glut. Now, al-Falih, who took over the position of energy minister just three months ago, indicates that the Kingdom is seemingly more amenable to such a plan.
On the same day, the International Energy Agency indicated that because of an overall drop in oil production, that glut may end up being reduced over the remainder of 2016. However, the combination of Saudi Arabia producing a record amount of oil last month and more American rigs being put to work has some industry analysts doubting those words.
The entire issue is one of many proposals that will be discussed when OPEC ministers get together in Algeria between September 26-28. One of the organization’s members to oppose such cuts is Iran.