Opec keeps current output cuts till December
abu dhabi — Oil producers agreed on Thursday to keep current production cuts until further review in December as the UAE and Saudi Arabia stressed the need for strict compliance by Opec and its allies to an output cut agreement to ensure market stability.
At the 16th Joint Ministerial Monitoring Committee (JMMC) meeting of Opec plus group in Abu Dhabi, as oil producers underscored the critical need for continued commitment to the Declaration of Cooperation (DoC), in support of oil market stability, Saudi Arabia pledged to further strengthen its voluntary production adjustment to 9.890 million bpd in October.
Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud, who chaired the meeting, which comes ahead of a formal gathering in December, along with the Russian Energy Minister Alexander Novak, said the kingdom is going “beyond its commitment” to ensure market stability.
“Saudi Arabia will keep its voluntary output cuts until the end of the year for further review during the next JMMC meeting in December. We will continue to monitor the market and take every possible step to ensure market continues to be sustainably supplied in a stable way.
Saudi Arabia is doing more than our humble commitment in terms of its voluntary contribution (to oil cut deal). And we here confirm our reduction in October will be 9.890 million bpd,” said Prince Abdulaziz.
Suhail bin Mohammed Faraj Faris Al Mazrouei, UAE’s Minister of Energy and Industry, affirmed the country’s steadfast commitment to the agreement, and said the UAE would maintain production levels that achieve market balance and “we reiterate our full commitment to support all measures that would help stabilise and balance the global oil market.”
Speaking to reporters on the sidelines of the meeting, the UAE minister said additional volumes would be removed markets if producers comply fully with agreed supply curbs. Iraq has been pumping 4.8 million bpd in recent months instead of its target of 4.512 million. Nigeria produced 1.84 million bpd in August versus its target of 1.685 million.
At the meeting, Iraq, Opec’s second-largest oil producer, pledged to reduce output by 175,000bpd by October, while Nigeria is to reduce supply by 57,000bpd. “All participating countries present, particularly those who are yet to reach full conformity with their output adjustments, were unequivocal in providing steadfast assurance of their determination to achieve at least 100 per cent conformity for the remainder of the year,” said a statement after the meeting.
We will maintain production levels that achieve market balance Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy and Industry
Saudi Arabia will keep its voluntary output cuts until the end of the year Prince Abdulaziz bin Salman Al Saud, Saudi Energy Minister
The outlook is not very good for 2020. Mohammed bin Hamad Al Rumhy, Oman Oil Minister
“Those countries which have over-conformed also reiterated their voluntary contribution. Resultantly, overall conformity will be brought to record level,” it said.
“Conformity with the voluntary production adjustments remains high, 136 per cent in August. However, the JMMC emphasised the core principles underpinning the DoC, namely equity, fairness and transparency,” said the statement.
The Saudi minister said a key strategic objective of the kingdom’s oil policy has always been promoting stability in the broader oil market.
“And to achieve market stability, it is imperative that we maintain a high degree of cohesiveness within Opec and in our relationship with our non-Opec partners led by Russia. Acting in unity sends stronger messages to the market and gives it greater comfort. I want to stress that this important pillar of our policy will remain unchanged.”
The Saudi minister said any formal decision on deeper oil cuts could be taken only at the next
Opec+ meeting in
December. “I can tell you quite frankly that in all deliberations we have discussed all the potential uncertainties as any responsible organisation and we are mindful of them,” Prince Abdulaziz said. “There is clear readiness to continue to be responsible and responsive.”
He added that the ministerial committee would gather again before the full Opec meeting in December. The Russian Energy Minister affirmed his country ‘s determination to work with all parties concerned to adapt to changing market conditions.
Oman’s Oil Minister Mohammed bin Hamad Al Rumhy said producers did not discuss deeper oil output cuts but that Nigeria and Iraq had promised to “fully comply” by October. “The outlook is not very good for 2020,” he said, adding there was “a kind of feeling” that cooperation between Opec and its allies should continue. Opec, Russia and other non-members agreed in December to reduce production by 1.2 million bpd — or 1.2 per cent of global supply — from January 1 this year. Opec’s share of the cut, which now runs to March 2020, is 800,000 bpd, delivered by 11 members and exempting Iran, Libya and Venezuela.
Oil prices tumbled more than 2 per cent on Wednesday after a report that US President Donald Trump was considering easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about energy demand. Brent crude futures were down $1.17, or 1.9 per cent, at $59.64 a barrel by 11:43 a.m. EDT (1543 GMT). US West Texas Intermediate crude futures fell $1.25, or 2.2 per cent, to $54.50 a barrel.