Falih: Output cuts to lower oil inventories

Compliance with the agreement, which calls for cuts to begin this month, had been "fantastic", he said.

Speaking at the World Economic Forum in Davos, Switzerland on Tuesday, Khalid al-Falih, Saudi Arabia's oil minister, said USA oil shale producers "will find they need higher prices" because the most prolific reservoirs are being exhausted and squeezed contractors are increasing the amount they charge.

Global oil prices rose to an 18-month high of more than $US58 a barrel after the Organisation of Petroleum Exporting Countries and several non-members agreed o end two years of unfettered production and cut output.

The committee, comprising ministers from Kuwait, Russia, Algeria, Venezuela and Oman, will meet next on March 17 in Kuwait and again in May.

The Declaration of Cooperation is to run for six months, with the option of a further six-month extension also possible. "We are doing our best to maximise participation in the fulfilment of the agreement".

Energy ministers from OPEC and non-OPEC countries meeting in Vienna have struck a positive note regarding their agreement to cut oil output as a committee set to monitor compliance with the deal meets for the first time.

OPEC's production fell by 221,000 bpd to 33.1 million bpd in December, according to secondary sources data in OPEC's monthly report published last week. Crude has since slipped about 5 percent from that peak as traders await proof that they will follow through.

It was decided during the meeting that majority of members curtail production by a combined amount of 1.2 million barrels although Libya and Nigeria were exempted from the plan due to their insecurity and political instability. "Now, we are seeing voluntary cuts by both sides", Al-Falih said. The organization agreed to reduce its output to 32.5 million barrels a day, although that total included about 740,000 barrels a day from former member Indonesia.

Russian Federation is not a member of OPEC but has agreed to reduce its output by a maximum of 300,000 barrels per day.

  • Anthony Vega