Gulf oil producers remain committed to curbs as world economy improves
Energy ministers from the Gulf are committed to complying with supply cuts to balance oil markets as they see encouraging signs of improvement in the global economy.
Ministers from the UAE, Saudi Arabia, Kuwait, Bahrain, Oman and Iraq discussed global oil demand recovery during a call on Friday.
They also reviewed the progress made by the Opec+ group of oil-producing nations in carrying out production cuts, state news agency Wam reported.
“Full compliance [with] the Opec+ deal, including making up for the limited progress on adherence, would speed up the recovery of the global oil market to the best interest of oil consumers and producers alike, the energy industry and the world economy,” the ministers said.
Global efforts to reopen economies in “a safe manner” were also discussed and the Gulf energy ministers said they are committed to reducing supply “to further speed up the oil market’s rebalancing”.
Opec+, which is led by Saudi Arabia and Russia, began to relax production curbs earlier this month as demand for crude picked up around the world. The alliance is now cutting back 7.7 million barrels per day of output.
Iraq, Nigeria, Kazakhstan and Angola failed to fully comply with the group’s historic pact to cut supply by 9.7 million bpd from the market. The curbs, which were effective from May to July, helped bring stability to energy markets after a record crunch in demand and prices.
On Friday, Iraq pledged to reduce its output by 400,000 bpd to make up for its failure to comply with the Opec+ pact.
Iraq’s oil minister Ihsan Abdul Jabbar said Opec’s second-largest producer was committed to making the cut, on top of the 850,000-bpd reduction in output it is expected to make this month and in September.
“The reduction could be adjusted when the six secondary sources publish their production figures,” the Iraqi and Saudi energy ministries said on Friday. The secondary sources refer to data from the energy industry provided by organisations such as the International Energy Agency.
The additional cut would bring the total volume of Iraq’s output reduction to 1.25 million bpd.
Oil prices, which hit a fivemonth high last week, gave up some of their gains on Friday amid tension between the US and China.
President Donald Trump issued an executive order banning companies and US residents from engaging in business with the Chinese companies that own WeChat and TikTok.
Brent, the international benchmark for more than half of the world’s crude, was down 1.53 per cent at $44.40 per barrel at the close of trade on Friday. West Texas Intermediate, the key benchmark for US crude, was down 1.74 per cent at $41.22 per barrel. Crude prices increased last week after a larger-than-expected reduction in crude stocks in the US.
The explosion of an ammonium nitrate cache in Lebanon on Tuesday, which killed more than 150 people, also aided the rally briefly.
Gulf energy ministers discussed global efforts to reopen economies in a safe manner during a call on Friday