Saudi Arabia and a number of OPEC delegates are expected to extend an agreement later this month to continue supply cuts and end a global oil supply glut that has punished U.S. energy workers as well as oil cartel countries in the last year.
The Organization of the Petroleum Exporting Countries is expected to extend the agreement that was made last year between OPEC members, like oil giant Saudi Arabia, and non-OPEC states like Russia near the end of the month.
“The willingness to extend the current understanding is strong among OPEC and non-OPEC participants,” an OPEC delegate told Reuters on Thursday, while declining to be named. “I have doubts that more cuts will be discussed as the current agreement is yielding a positive outcome.” Other delegates have made similar statements on Thursday.
The supply-cut deal is expected to be extended at the next OPEC meeting that will occur May 25, incidentally, as President Trump will be in Saudi Arabia as part of his first foreign trip abroad.
Trump is expected to visit the country as part of a foreign tour that will also include Israel and a trip to the Vatican in Rome. Trump said Thursday that the visit to Saudi Arabia will likely focus primarily on cooperation in fighting terrorism, yet in recent weeks Saudi officials have been in Washington for talks on U.S. companies, including energy firms, investing in the desert kingdom as it seeks to implement a landmark privatization plan.
Ahead of Trump’s announcement, House Speaker Paul Ryan, R-Wisc., met on Capitol Hill with Saudi Foreign Minister Adel bin Ahmed Al-Jubeir to discuss “topics of common concern,” according to the kingdom’s official news wire service.
The foreign minister also met with with the House Armed Services Committee vice chairman Rep. Adam Smith, R-Wash., and Rep. Peter Roskam, R-Ill.
Visits also took place with House Foreign Affairs Committee chairman Rep. Ed Royce, R-Calif., and ranking member Elliott Engel, D-N.Y., as well as several chairpersons and ranking members of the foreign affairs committee’s subcommittees. The foreign minister also met with Sen. Joe Manchin, D-W.Va., who serves on both the Senate energy and intelligence committees.
Secretary of State Rex Tillerson said last month that the administration supports the Saudi 2030 privatization plan, which will diversify the major oil producing state’s economy away from oil. The country’s budget has been harmed by the oil glut, which cut the price of oil in half and with it the Saudi economy and budget.
The impact of the glut forced it to develop the privatization plan, which will result in it listing its national oil company, Saudi Aramco, as a private company next year in a landmark event that is expected to spur the flow of private dollars into the company.
Tillerson said all of Trump’s Cabinet members have met with their Saudi counterparts in recent weeks in support of the kingdom’s plans, which he sees as a job creation opportunity for the United States.
“When U.S. companies invest in the Saudi economy, everyone wins,” Tillerson said last month during a meeting of Saudi business proponents and government officials in Washington. “The U.S. creates jobs at home, and businesses in the Gulf region get the best business partners that the global marketplace has to offer.”
But “for Saudi Arabia’s transformation to succeed, the private sector requires support from us in the public sector,” Tillerson said. “This means engaging the Saudi government to ensure rule of law in commercial transactions; transparency in procurement; adherence to international, science-based standards developed in consultation with industry experts; the protection of intellectual property rights; and a simpler, streamlined process to register and establish businesses in the kingdom.”
The Saudi oil company became the owner of the largest U.S. refinery in Texas earlier this week, which underscores Tillerson’s push for greater economic dialogue between the two countries. Talks on Shell selling its share of the Port Arthur refinery had been underway since last year. Shell and Saudi Aramco built the factory together in a joint venture the two penned over 20 years ago.
“We understand that the government will aim to hold 50 percent of its non-Aramco assets abroad, compared to the 95 percent of the [public investment] funds that are currently invested in Saudi Arabia,” Tillerson said. “Saudi Arabia will find many promising investment opportunities in the United States, and that will become more apparent as you further engage with our companies.”
