Saudi Arabia seeks to further reduce oil stockpiles

File photo of Saudi Energy and Oil Minister Khalid Al-Falih at the Future Investment Initiative (FII) conference in Riyadh, on Oct 24, 2017. (FAYEZ NURELDINE/AFP)

Saudi Arabia said on Wednesday (Feb 14) it will further trim oil production and exports next month to reduce excess stockpiles that have weighed on crude prices, as concerns mount over US oversupply.

Saudi Aramco's crude output in March will be 100,000 barrels per day (bpd) below its February level while exports will be kept below seven million bpd, the energy ministry said.

"Saudi Arabia remains focused on working down excess oil inventories," a ministry spokesman said.

"Market volatility is a common concern for producers and consumers, and the kingdom is committed to mitigating this volatility and moderating its negative impacts."

Saudi Arabia, the world's top oil exporter, last month called for extending cooperation between OPEC and non-OPEC producers beyond 2018, after a deal to throttle output succeeded in shoring up prices.

Oil prices fell from above US$110 per barrel in 2014 to around US$30 at the start of 2016. But the market has seen a turnaround since and oil prices are now close to US$60.

Saudi Energy Minister Khalid al-Falih said on Wednesday that producers would rather persist with production cuts this year even if that brings about a slight supply shortage.

"If we have to overbalance the market a little bit, then so be it," he told reporters following an industry conference in Riyadh.

His comment comes a day after the International Energy Agency warned that surging oil production in the United States is putting the brakes on crude prices, undermining the kingdom's efforts.

Shale producers, particularly in the United States - who are not party to the deal - are ramping up output to cash in on rebounding crude prices.

But Falih and his Russian counterpart, Alexander Novak, rejected the idea of any "exit strategy" from production cuts.

Following their meeting in Riyadh, the ministers of the two major oil producers said they agreed on the need to cooperate to prop up prices amid a surge in US output.

"I am confident that our high degree of cooperation and coordination will continue to bring the desired results," Falih said.