By Christopher Alessi and Summer Said

ALGIERS -- Saudi Arabia and Russia signaled at a meeting of oil producers that they have the capacity to further ramp up production to match global supply disruptions, while keeping crude price steady, even as they deferred any concrete decisions on output levels to later this year.

The Organization of the Petroleum Exporting Countries -- de facto led by Saudi Arabia -- and its allies led by Russia on Sunday reiterated plans to gradually continue raising crude production in line with a decision at the start of the summer. But the producers were vague on the full number of extra oil barrels they plan to supply to the market. The group said it would meet again in Abu Dhabi on Nov. 11 to further hammer out details.

After nearly two years of close coordination on crude-oil output, OPEC and Russia said supply and demand in the market had been sufficiently rebalanced.

"We have achieved the objectives pretty much of what we set out in 2016," Saudi Arabian Energy Minister Khalid al-Falih said at the start of the gathering. "Markets are relatively balanced," he added.

Mr. Falih also insisted that Saudi Arabia had enough spare oil capacity -- around 1.5 million barrels a day -- to meet any shortages in the global oil market. He added that the kingdom would increase output in October, in line with market needs. "Demand will be higher in October than September and it will be met 100%."

The meeting comes amid growing risks to global supply, including from OPEC members Iran, Venezuela and Libya.

Market concerns over falling Iranian exports in particular have helped to bolster prices recently, sending Brent crude -- the global benchmark -- close to multiyear highs. Buyers of Iranian crude have begun cutting imports over the past few months ahead of planned U.S. economic sanctions on Iran's oil industry, set to take effect Nov. 4.

President Trump in May pulled the U.S. out of a 2015 international agreement to curb Iran's nuclear program, triggering the reinstatement of economic sanctions on the Islamic Republic.

Analysts have estimated around one million barrels a day of Iran's roughly 2.5 million barrels a day in exports could be at risk as a result of the sanctions.

Mr. Trump's decision helped Brent temporarily breach the $80-a-barrel threshold for the first time in 3 1/2 years in May, prompting concerns by some producers that prices had risen too high and could damp global demand.

Saudi Arabia and Russia in late June engineered a plan to have OPEC and its partners begin ramping up production this summer by as many as one million barrels a day after more than a year of holding back output.

The move helped put a cap on rapidly rising prices, until Brent again temporarily surpassed the $80-a-barrel mark this month as the market refocused on risks to Iranian supply.

OPEC and 10 producers outside the cartel -- led by Russia -- first agreed in late 2016 to hold back production by around 1.8 million barrels a day starting in January 2017, in an effort to rein in a supply glut that had weighed on prices since late 2014.

However, as a result deeper cuts from countries like Saudi Arabia and production outages in other OPEC members, compliance with the deal has exceeded the planned quotas, rising to around 150% -- meaning the countries were cutting even more output than promised. OPEC and its partners agreed at the June meeting to bring compliance down to 100%, a goal they reiterated on Sunday.

OPEC and non-OPEC compliance with the agreement fell to 129% in August, the cartel said.

OPEC has also faced sustained pressure from Mr. Trump to churn out more oil to keep oil prices lower. "The OPEC monopoly must get prices down!" Mr. Trump tweeted on Thursday, as OPEC ministers descended on Algiers.

Mr. Falih on Sunday said it was "of course not true" that OPEC was responding to pressure from the president. "We have been looking at more important aspects, which is adequacy of supply," he added.

Write to Christopher Alessi at christopher.alessi@wsj.com and Summer Said at summer.said@wsj.com

(END) Dow Jones Newswires

September 23, 2018 16:53 ET (20:53 GMT)

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