Oil accord with Russia helping market, demand healthy: Al-Falih

WORLD energy markets can handle supplies of US shale oil next year as demand is rising and deals between Russia and Saudi Arabia have helped stabilize crude prices, Saudi Arabia said on Thursday, suggesting confidence about the outlook.

Saudi Arabia and Russia, the world’s biggest producers of crude, helped secure a deal between OPEC and 10 rival suppliers to cut output until the end of March 2018 in an effort to reduce a price-sapping glut.

Saudi Energy Minister Khalid Al-Falih said he welcomed the contribution of US shale oil supplies as global demand for crude was on the rise.

“Shale coming in and happening again in 2018 doesn’t bother me at all. The market can absorb it,” Falih said, speaking alongside Russian Energy Minister Alexander Novak as part of a panel discussion at an energy forum in Moscow.

”We have seen a steady reduction in inventories. We see as we enter the fourth quarter that supply is less than demand and inventories are declining around the world,” Falih said.

The comments came a day after Russian President Vladimir Putin said the supply-cutting deal could be extended to the end of 2018, a longer timeframe than others have suggested.

Oil rose above $56 a barrel on Thursday, supported by expectations Saudi Arabia and non-OPEC member Russia would extend the curbs.

The Saudi minister, who said in July that an extension of the agreement would most likely be needed into the second quarter of 2018 as a minimum, did not comment on the issue on Thursday.

Novak said Moscow would support the possible participation of additional countries in the output deal, and that he was satisfied with current oil prices.

Al-Falih said Saudi Arabia wants to develop ties with Russia further, particularly in the private sector.

“I see huge opportunities in front of our countries and for the business sector in both nations,” Al-Falih said.

The visit of Custodian of the Two Holy Mosques King Salman to Russia shows the high degree of mutual trust between Russia and Saudi Arabia, Al-Falih said.

Saudi Aramco is discussing several investment opportunities with Russian firms, Aramco chief executive Amin Nasser told reporters earlier in the day.

Nasser told the Arabiya television channel in Moscow that he sees the oil market stabilizing as demand growth continues and global oil inventories decline.