The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, could ramp up more oil to global markets “in the near future” to fill the gap from U.S. sanctions on Iran and the loss of Venezuela output, the Saudi Arabia energy minister said Friday.

During a panel discussion hosted by CNNMoney, Khalid Al-Falih said discussions are ongoing with cartel members and Russia to balance the market and reduce prices, which had climbed to about $80/bbl in recent weeks.

OPEC and its allies are scheduled to meet June 22 to discuss, among other things, the supply reduction put in place that has pulled since last year about 1.8 million b/d total from the market.

"It is the intent of all producers to ensure that the oil market remains healthy, and if that means adjusting our policy in June, we are certainly prepared to do it," Al-Falih said. "Two years ago we pulled supply. I think in the near future there will be time to release supply.”

It is likely the reductions will end in the second half of this year, he said. Saudi Arabia, which leads OPEC, has had “intensive discussions” with Russia’s Energy Minister Alexander Novak, “and I think we're aligned on that…” The Saudis share their customers’ “anxiety.”

In early April Saudi Arabia had been advocating for higher oil prices and signaled the reductions would continue through this year.

However, on April 20, President Trump criticized the cartel. “Looks like OPEC is at it again,” he tweeted. “With record amounts of oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High. No good and will not be accepted!”

The cartel began discussing whether to ease production cuts following Trump’s tweet, according to OPEC Secretary General Mohammad Barkindo. During a panel discussion in St. Petersburg, Russia on Friday, he said, “We pride ourselves as friends of the United States.”

Previous U.S. energy secretaries have in the past pressured OPEC to reduce prices, so it wasn’t unusual that the cartel would react to Trump’s comments, he added.

Prices have moved higher not only because of OPEC and its allies’ pullback, but also from threatened U.S. sanctions on OPEC member Iran, which has been exporting as much 1 million b/d, along with the energy industry collapse for OPEC member Venezuela, which also has cut into global supply.

If OPEC and its allies were to increase oil output, it would be gradual to avoid any major shocks to the market, Al-Falih said.

After peaking a few days ago to multi-year highs of about $72.83/bbl, July West Texas Intermediate (WTI) prices fell about 4% Friday to settle at $67.88/bbl.

Even if OPEC and Russia were to increase their global output, the delay in the ramp and other factors may keep oil prices higher, analysts said.

Societe Generale (SocGen) on Friday raised forecasts for Brent and WTI into 2020. For 3Q2018 the Brent forecast was increased by $12 to $80/bbl Brent and WTI was increased by $11 to $75/bbl. For 4Q2018, Brent is seen averaging $78, while WTI was set at $73. Brent was adjusted to $72.75 in 2019, while WTI is expected to average $67.75. The 2020 averages now are up $5 for Brent at $70, and are $4 higher for WTI at $65.

“Changes to our outlook for global demand growth and non-OPEC supply growth have been relatively minor; we’ve tweaked our U.S. growth output growth forecast slightly lower, due to pipeline constraints out of the Permian Basin,” said SocGen’s Michael Wittner and Mark Kogel.

“The declines in OPEC output, over and above their planned cuts, help to cause large expected global stockdraws in 2Q2018 and 3Q2018,” they said. “Our view is that this level of prices, along with the large stockdraws, should prompt OPEC and Russia to start increasing production in 4Q2018.”
Next year, higher OPEC/Russian production, stronger U.S. onshore growth and slightly weaker global demand “will lead to a better supplied market; moderate global stock builds are forecast for 2019,” which should exert downward pressure on prices next year.

By the second half of 2019, however, SocGen’s team expects to oil markets to begin focusing on the Jan. 1, 2020 implementation of the International Maritime Organisation (IMO) low sulphur requirements (0.5%) for global shipping fuel, which should have “major impacts on the products markets.”

Separately on Friday, Francisco Blanch and his team at BofA Merrill Lynch Global Research noted that prompt Brent crude oil prices hit their 2Q2018 target of $80/bbl.

“Looking forward, we maintain our central scenario but also see a risk of two more oil price paths,” Blanch said. The baseline forecast for oil prices “remains a sticky $70/bbl-plus Brent environment in 2018-20, supported by a relatively scarce crude supply picture, robust global demand and a continued drain in inventories.

“Yet, our central scenario only accounts for an additional drop of 500,000 b/d in Venezuela output and no net Iran supply losses arising from sanctions, just a redistribution of sales away from Europe and Japan/Korea.”