Arab News, Saturday, Sep 19, 2020 | Safar 02, 1442
Saudi Arabia makes hard-hitting call for full OPEC+ compliance on cuts
Saudi Arabia: Saudi Arabia has called on its partners in the
OPEC+ alliance to be vigilant, disciplined and transparent in their commitment
to the oil cuts agreement that have brought global crude back from the chaos of
earlier this year.
In hard-hitting opening remarks, Prince Abdul Aziz bin Salman, the Kingdom’s
energy minister, said it was essential for all members of the 23-strong
organization to comply fully with the terms of their agreements.
“Full compliance is not an act of charity. It is an integral part of our
collective effort to maximize the interest and gains of every individual member
of this group. And compliance is a sovereign decision that we have all taken
willingly and responsibly,” he told delegates at the monthly virtual meeting of
the Joint Ministerial Monitoring Committee (JMMC) that oversees OPEC+ affairs.
The meeting had heard a technical report showing that only six of the OPEC+
members had stuck by agreed production levels in the period from May to August.
Saudi Arabia cut by far the biggest amount in that period, while the UAE -
traditionally a diligent conformer to OPEC+ agreements - missed its production
targets by a significant amount, which has widened over the past two months.
But the overall level of compliance to the cuts was at a historical high level
in August, with 101 per cent conformity among all OPEC+ members.
The Prince said a “key lesson of the past few weeks is that being transparent
with the market, and with this group, about production and compliance always
pays off.
“Attempts to outsmart the market will not succeed, and are counter-productive,
when we have the eyes, and the technology, of the world upon us,” he added.
In a meeting with journalists, Suhail Al-Mazrouei, the UAE energy minister who
was seated alongside the Saudi Prince in Riyadh, reaffirmed his full support for
the OPEC+ commitments. “We have always been a transparent and full partner to
all out colleagues in these agreements,” he said.
Prince Abdul Aziz said he wanted to “dispel any concerns that may have been
assumed by analysts, the media or the market” about the UAE’s commitment to the
OPEC+ cuts.
Under-complying countries, including the UAE, have agreed to cut more crude in
the future to compensate for past shortfalls, but Prince Abdul Aziz warned: “The
compensation mechanism was not established as a substitute for full compliance,
nor to encourage non-compliance. Not fully complying, and then compensating,
should not become the norm.”
He added he would like to see the compensation scheme ended this year, and the
JMMC was considering that possibility.
Some analysts had expected the OPEC+ meeting to agree to reverse some of the
increases brought in under phase two of the historic April cuts deal, but this
was never under serious consideration.
“In the face of uncertainty, the market will be increasingly looking to us for
direction. We must demonstrate that we are disciplined and fully committed to
our agreement, and as a group we are pro-active and pre-emptive, and ready to
act when it is needed,” Prince Abdul Aziz said.
“There is no other choice or panacea. This is the only effective medicament to
see us through these challenging times,” he added.
Prince Adbul Aziz had a blunt message for speculators looking to make profits in
volatile trading. “To those who want to short the market, I say - make my day.”
The strong Saudi message to OPEC+ was echoed by the Russian energy minister,
Alexander Novak, who said: “I urge everyone to continue sticking to this and to
maintain the high level we have achieved.”
Global oil prices, which have been under pressure in recent weeks on fears of a
COVID-19 resurgence and falling oil demand, recovered some lost ground to trade
over $43 a barrel.