Saudis Warn Producers About Cheating on Oil-Cut Deal
By Benoit Faucon and Summer Said
Saudi Arabia is sending strong signals, publicly and privately, that it won't keep cutting back oil output unless other big petroleum producers fully join its effort to raise crude prices, people familiar with the matter said.
The tensions were apparent at a private meeting in Houston last week, when Saudi energy minister Khalid al-Falih took aside his Russian and Iraqi counterparts and expressed his frustration, according to people familiar with the matter. Iraq, a fellow member of the Organization of the Petroleum Exporting Countries, and Russia, which isn't in the cartel, had both agreed to cut output but were far behind.
"He was really fed up," said a person familiar with the meeting, speaking of Mr. Falih.
Russia's energy minister, Alexander Novak, and Iraq's top oil official, Jabar Ali al-Luaibi, both reassured Mr. Falih that their countries were committed to cuts, according to people familiar with the meeting. A Russian energy ministry spokesman and Mr. Luaibi didn't respond to requests for comment.
The exchange underscores the pressure on Saudi Arabia as it bears the brunt of OPEC's painful 1.2 million barrel a day production cut. The OPEC production agreement was supposed to lift the oil market out of two-year funk and ultimately help producers like Saudi Arabia, but prices have fallen back close to their pre-cut levels.
Some OPEC members have fallen short of their commitments, with Saudi Arabia making it up for them. Saudi Arabia has cut 800,000 barrels a day since October, OPEC says, about 300,000 barrels a day more than it promised. #oil