Saudi Sees Oil Output Deal Extending to non-OPEC Nations

Khalid Al-Falih, energy minister for Saudi Arabia

The notion of other nations joining the Organization of the Petroleum Exporting Countries' (OPEC) proposed global production cut was one factor helping to prop up oil prices this week, and Khalid Al-Falih, energy minister for Saudi Arabia, said at a London conference that non-OPEC nations are in talks with the cartel to lower supply and stabilize prices, CBC reports.

This follows a comment last week from Suhail Mohammed Al Mazrouei, energy minister for the United Arab Emirates, that "It takes more than OPEC to stabilize the market - there is a realization that other big players need to do their jobs," including U.S. shale producers.

He added: "If we all collectively agree that there is an oversupply, then we need to collectively participate in fixing this; we are sending an open invitation to everyone."

Details of the reported talks between OPEC nations and non-members were not forthcoming.

But at the end of the day, it will be the Saudis who decide whether anything meaningful is achieved in November when OPEC convenes to ratify the reduction deal, according to Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets.

She told CNBC, "Almost all these other countries are basically maxed out and really it will have to be the Saudis and the GCC (Gulf Cooperation Council) who takes the cut; if the Saudis incentivize the deal, I think it gets done."

Croft went on to note that while OPEC and Russia (whose two largest oil producers say they will comply with any government order to curb output) hope that some U.S. production will return as a result of their intended goal to keep prices between $50 and $60 per barrel, "$50 to $60 is probably not enough to resurrect the entire U.S. shale complex.

"I don't think they are aiming for $70 to $80, because I don't think they want to bring it all back."

Bloomberg notes that while the broad principles of the deal are in place, "its implementation could be challenging"; this is true on many fronts, starting with Jabar Ali al-Luaibi, oil minister for Iraq, alleged to be displeased that fellow members had agreed to an output ceiling to begin with.

Additionally, and despite its vow to cooperate with OPEC, Russia in the form of Rosneft this week bragged that it is able to add as much as 4 million barrels per day to global stockpiles; and Nigeria is currently cutting the price of every type of crude it sells in order to regain global market share.

Bloomberg has also noted that in addition to Iraq and Iran's likelihood of boosting production regardless, Nigeria declared itself exempt within hours of the reduction deal being reached.