Saudi Arabia hopes to extend Opec production cuts by early July

Khalid al-Falih, Saudi Arabia's energy minister, looks on during a panel debate at the St. Petersburg International Economic Forum (SPIEF) in St. Petersburg, Russia, on Friday, May 25, 2018. The economic forum this year will be attended by President Vladimir Putin and French President Emmanuel Macron, and panels include everything from how to do business in Russia to biotechnology and blockchain. Photographer: Chris Ratcliffe/Bloomberg
Khalid al-Falih, Saudi Arabia's energy minister, looks on during a panel debate at the St. Petersburg International Economic Forum (SPIEF) in St. Petersburg, Russia, on Friday, May 25, 2018. The economic forum this year will be attended by President Vladimir Putin and French President Emmanuel Macron, and panels include everything from how to do business in Russia to biotechnology and blockchain. Photographer: Chris Ratcliffe/Bloomberg

Saudi Arabia hopes OPEC and its allies will agree to extend oil production cuts into the second half of the year at a meeting that will probably take place in the first week of July, according to the country’s energy minister.

“We are hoping that we will reach consensus to extend our agreement when we meet in two weeks time in Vienna” Khalid Al-Falih told reporters Sunday on the sidelines of a G-20 ministerial meeting on energy and environment in Japan. The group will probably meet “the first week of July and that will secure the rebalancing the market as we strive for it.”

Saudi Arabia, the group’s defacto leader, is seeking to balance global oil markets before 2020, Al-Falih said over the weekend. A seasonal pickup in demand in the second half of the year and refineries returning from maintenance will help align supply and consumption, he said.

His comments come after the International Energy Agency on Friday forecast global supplies will expand far more than demand next year, putting further pressure on Organization of Petroleum Exporting Countries. Even though growth in oil demand will accelerate to 1.4 million barrels a day in 2020, it will be eclipsed by a 2.3 million barrel-a-day surge in output, as the ongoing boom in U.S. shale is augmented by new fields in Brazil, Norway and Canada, according to the IEA.

“I am fairly confident that the fundamentals are going in the right direction,” Al-Falih told reporters.

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