Saudi Arabia will work with OPEC and non-OPEC members to help stabilize oil markets, it said on Thursday a month ahead of an informal meeting of major producing countries in Algeria.
Members of the Organization of the Petroleum Exporting Countries will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria from Sept. 26-28, Qatar’s energy ministry said on Monday.
“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,” Saudi Energy Minister Khalid al-Falih said in a statement.
The statement, sent by the Saudi Energy Ministry, came in the form of a question-and-answer session with the state news agency SPA.
Oil prices extended earlier gains after the remarks. Brent crude was up more than 3 percent at $45.50 a barrel.
Saudi Arabia, OPEC’s largest oil producer, pledged during the last OPEC meeting in June that the kingdom would not flood the market with oil.
The statement also said a July spike in Saudi oil output to a record 10.67 million barrels per day was due to summer demand and requests from customers.
The statement indicates Riyadh is worried that oil prices could be heading back towards $40 per barrel or lower due to fears of oversupply.
Prices in recent days were supported by renewed calls by some OPEC members to freeze production, a demand that non-OPEC oil-producing giant Russia was quick to dismiss.
Some OPEC officials had said a revival of talks on a global oil production freeze could be discussed informally among OPEC and non-OPEC countries in Algeria if oil prices weakened.
OPEC member Iran has been the main opponent of a freeze as it looks to raise its output to levels seen before the imposition of now-ended Western sanctions.
Falih said in the statement the market is on the right track towards rebalancing but “the process of clearing crude and products inventories will take time”.
“But 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.