Saudi crown prince supports extending Opec production cuts to balance supply and demand

Saudi Arabia’s crown prince Mohammed bin Salman said on Saturday his country supports extending an agreement by major oil producers to limit output beyond next March because the deal is necessary to balance supply with demand.

In a statement, Prince Mohammed said that Saudi Arabia “affirms its readiness to extend the production cut agreement, which proved its feasibility by rebalancing supply and demand.”

“The journey toward restoring balance to markets, led by the Kingdom, is proving successful despite the challenges,” he said.

The effect of the production limits approved by major oil countries has been muted by rising output from US shale-oil producers. The prince said that high demand for oil has absorbed the increased supply from shale oil.

Saudi Arabia is the world’s largest producer and the most influential member of Opec. The agreement, which kicked in at the start of 2017, also included Russia and other non-Opec countries.

The Organisation of the Petroleum Exporting Countries is expected to take up the agreement at its next meeting on November 30.

On Friday, Brent Crude, the international benchmark oil, rose above US$60 for the first time since 2015 as traders grew increasingly confident that Opec will continue to limit pumping.

The slump in oil prices that began in mid-2014 has created budget problems for Saudi Arabia and other major producers. Prince Mohammed has laid out a sweeping plan called “Vision 2030” to wean Saudi Arabia off its near total dependence on oil exports.