Saudi energy minister: unlikely to extend producers' agreement

Saudi energy minister Khalid al-Falih gestures during the 2017 budget news conference in Riyadh, Saudi Arabia December 22, 2016. REUTERS/Faisal Al Nasser

ABU DHABI (Reuters) - OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, because of the level of compliance with the deal and the rebalancing of the market, Saudi Arabian Energy Minister Khalid al-Falih said on Monday.

However Falih, speaking to reporters on the sidelines of an industry event in Abu Dhabi, also said producers would reassess the situation and extend the agreement if necessary.

“We don’t think it’s necessary given the level of compliance...and given the expectations of demand,” he said.

“My expectations (are)...that the rebalancing that started slowly in 2016 will have its full impact by the first half.”

Falih said: “Based on my judgment today it’s unlikely that we will need to continue (the agreement) - demand will pick up in the summer and we want to make sure that the market is supplied well. We don’t want to create a shortage or squeeze.

“The extension will only happen if there is a need.”

Reporting by Rania El Gamal; Writing by Andrew Torchia