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Oil producers pledge to respect cuts as market sags
ABU DHABI, Sept 13, 2019 (BSS/AFP) – Oil producers pledged Thursday to
comply with output cuts aimed at rebalancing the sagging market, but offered
no further reductions in a sign they are short on options in a market
depressed by US-China tensions.
OPEC kingpin Saudi Arabia led calls to abide by promises on production
curbs that the cartel hopes will drive up prices — with some including
Nigeria and Iraq accused of exceeding their quotas.
“Every country should live up to its commitments,” new Saudi Energy
Minister Prince Abdulaziz bin Salman said as a committee of producers charged
with monitoring the cuts and assessing the oil market held talks in Abu
Dhabi.
Prince Abdulaziz said the wider OPEC+ alliance which includes Russia is
prepared to act to protect the market if sanctions-hit Iran, also a member of
the group, returns to the market.
He told the Joint Ministerial Monitoring Committee (JMMC) meeting that it
was imperative to restore stability in the oil market, where prices have
slumped to below $60 a barrel.
Dubbed OPEC+, the 24-member alliance of cartel and non-cartel producers
decided last year to cut output by 1.2 million barrels per day (bpd) from
January 2019, to boost prices after they fell by more thaREFILn 40 percent.
The cuts were extended by nine months until the end of March 2020 but that
failed to invigorate the market, and observers believe the usual levers to
control prices seem to be having little effect.
However, host nation United Arab Emirates (UAE) pledged Thursday to
further cut its output by October and Iraq and Nigeria said it will withdraw
a total of 230,000 barrels per day (bpd).
“We reiterate our firm commitment to full compliance,” Iraqi Oil Minister
Thamer al-Ghadban told a press conference. “September export levels will be
significantly lower than August and there will be deeper cuts in October.”
Saudi Arabia, which has been shouldering the burden of existing production
cuts, will continue to reduce its oil production “at a rate exceeding the
quota agreed through OPEC+”, Prince Abdulaziz said.
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UAE-ENERGY-SAUDI-RUSSIA-OPEC 2 LAST ABU DHABI
– Subdued outlook –
The oil market has been hit by fears that global demand will be dented by
the US-China trade war and the slowdown in world economy.
UAE Energy Minister Suheil al-Mazrouei said on Sunday that the group will
do whatever necessary to stabilise the market, and that further production
cuts could be considered.
However, he admitted the issue was not entirely in the hands of the
world’s top producers, with the market no longer governed by supply but being
influenced more by the prolonged row between Beijing and Washington and other
geopolitical factors.
“The market is giving up on OPEC+ being able to support the price,” Ole
Hansen, head of commodities strategy at Saxo Bank A/S told Bloomberg News as
prices sagged again Thursday.
“They can control production but not demand.”
There was no good news from the latest International Energy Agency (IEA)
monthly report, which said growth in global demand for oil is expected to
remain subdued.
“International trade relations have further deteriorated in the past few
weeks,” the Paris-based IEA said, although US and Chinese officials have
announced they would resume trade negotiations in early October.
“Trade disputes and rising uncertainty about the impact of the UK’s
possible exit from the European Union are reducing global growth through
lower business and consumer confidence, supply chain re-assessments,
declining investment and direct reduction of trade,” it said.
Against the uncertain backdrop, the IEA left its oil demand growth
forecasts for 2019 and 2020, lowered in its previous monthly report,
unchanged at 1.1 million barrels per day and 1.3 million bpd.
The JMMC does not take decisions but makes recommendations for action
which will be considered by the full OPEC+ ministerial meeting in December.
Veteran official Khalid al-Falih was replaced earlier this month as Saudi
oil minister as the top crude exporter accelerates preparations for the much-
anticipated IPO of its energy giant Aramco.
A son of King Salman, and half-brother to de facto ruler Crown Prince
Mohammed bin Salman, he is the first member of the royal family ever put in
charge of the kingdom’s all-important energy ministry.
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