Al-Falih hints at 'action' to help stabilize oil market

Saudi Arabia is ready to work with OPEC and non-member countries to help stabilize the global oil market, the kingdom’s energy minister Khalid Al-Falih said in a statement on Thursday carried by state news agency SPA.

"We are going to have a ministerial meeting of IEF in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilize the market," Al-Falih said.

Major oil producers are expected to hold an informal meeting on the sidelines of the International Energy Forum (IEF) in Algeria  next month, after the recent fall in oil prices.

The statement revealed concerns that oil prices could possibly decline to $40 bbl or lower amid market oversupply.

However, Al-Falih stressed that the market is on the right track towards rebalancing, but explained that more time is still needed for clearing inventories.

"The large short positioning in the market has caused the oil price to undershoot. However, this is unsustainable. To reverse the declines in investment and output, oil prices have to go up from the current levels," he added.

The statement also attributed the kingdom’s record oil output in July to higher demand during the summer season, as well as requests from customers.

Brent crude rose 2 percent to $46.90 a barrel (bbl) on Friday following the Saudi energy minister’s comments. West Texas Intermediate (WTI) crude oil gained 2.3 percent to $44.49/bbl, its highest level in three weeks.