Saudi Arabian Energy Minister Khalid Al-Falih said on Wednesday that the cut of 1.2 million barrels a day agreed by the OPEC+ coalition will be sufficient to balance markets, and that the group is prepared for further action if it proves inadequate. OPEC and its allies decided last month to cut their overall output by 1.2 million bpd starting in January, to boost prices hit by a supply glut and fears demand could plummet.
Saudi-led OPEC and Russian Federation agreed on December 7 to curb their total crude oil production by 1.2 mbpd beginning on January 1 for six months, but the plan so far has had little impact on crude prices. "We are concerned about volatility in the oil market".
"This certification underscores why every barrel we produce is the most profitable in the world and why we believe Saudi Aramco is the world's most valuable company", Falih said in the statement.
In December, the Organization of Oil Exporting Countries made a decision to reduce oil supply by 1.2 million barrels starting January. "We have seen peaks and drops in prices completely unjustified by the fundamentals". The global benchmark crude traded at a premium of $8.74 a barrel to West Texas Intermediate for the same month.
The country said oil reserves witnessed an increase from 2.2 billion barrels to 263.2 billion barrels while gas reserves increased from 17 trillion cubic feet to 319.5 trillion cubic feet. "The results point out that the Kingdom's reserves of oil and gas are bigger than what we have been announcing", Falih asserted.
Saudi Arabia's reserves of easily recoverable oil have always been the world's largest.
But the kingdom has posted budget shortfalls each year since a major 2014 crash in crude prices, and has turned to borrowing as well as pursuing economic reforms.
It was the first time Riyadh has tapped global debt markets since the October murder of journalist Jamal Khashoggi, which tarnished Saudi Arabia's public image.
A trade agreement could mitigate the global economic slowdown and keep global oil demand high; however, failure to reach a deal would worsen economic growth prospects and keep a downward pressure on oil demand and prices, according to experts. They said that the central bank will be especially cautious about pushing ahead with interest-rate increases after raising them four times previous year.