OPEC+ Job Isn’t Done as Oil Inventory Rising, Minister Says

Efforts by OPEC and its allies to balance the global supply and demand of oil aren’t complete because crude inventories continue to rise, according to United Arab Emirates Oil Minister Suhail Mohammed Al Mazrouei.

“The job is not complete,” Al Mazrouei told reporters in the Saudi Arabian city of Jeddah. “We are still seeing some inventory buildup and we need to attend to it.”

Saudi Arabia, Russia and other oil producers in a global coalition are meeting in Jeddah this weekend to consider whether they’ll need to continue keeping supplies restrained during the second half of the year. While U.S. President Donald Trump’s squeeze on Iran’s oil exports threatens to cause a shortage, the producers are wary of opening the taps too soon. Global supplies are also strained by a crisis over contaminated Russian crude and simmering geopolitical tensions from Venezuela to Libya.

Oman’s oil minister, Mohammed Al Rumhi, said the producers will stick to their policy of limiting production as “there is no need to take any action.” Saudi Arabia’s Energy Minister Khalid Al-Falih said in an interview with Reuters that OPEC will respond to the oil market’s needs despite uncertainty about whether there is an oil shortage, particularly given the United States’ building inventories.

Delegates said OPEC+ is likely to approve an extension of the current supply cuts until the end of the year, while allowing Saudi Arabia to increase output to its agreed quota, if necessary. The kingdom has been over-complying with the cuts, giving room for some gains by other producers. OPEC+ compliance for April was 168%, according to other delegates.

“The global inventories particularly in the U.S. inventories are high and are still rising, which suggests that there is no lack of supplies,” said Sara Vakhshouri, head of Washington, D.C.-based consultant SVB Energy International.

The Organization of Petroleum Exporting Countries will fill any supply gaps that may emerge from tighter sanctions on Iran, Al Mazrouei said. “If there is a need to attend to any shortage in the market we will do it, but we don’t see that.”

Officials from OPEC+, as the coalition between the group and its allies is known, are due to attend the Joint Ministerial Monitoring Committee meeting on Sunday to assess the market. They won’t make a decision on whether to extend production cuts until the full group meets in June in Vienna, Al Mazrouei and Azerbaijan’s Energy Minister Parviz Shahbazov said.

“During this JMMC the main challenge for the members is to find out how much Iran’s formal and especially the informal oil sales in the grey market would be,” Vakhshouri said.

As Trump squeezes oil exports from Iran with sanctions, the discussions among other producers such as Saudi Arabia and Russia are likely to focus during this weekend’s talks in Jeddah on whether they need to fill a resulting supply gap. Their talks take place amid flaring political tensions in the Middle East, where Riyadh says its oil tankers and pipeline network were attacked this week.