DUBAI/MOSCOW/LONDON – Saudi Arabia called on fellow OPEC+ members on Tuesday to be flexible in responding to oil market needs as it builds the case for a tighter oil production policy in 2021 to tackle weaker demand amid a new wave of the coronavirus pandemic.
Source: Reuters
OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia and others, is considering delaying a plan to boost output by 2 million barrels per day (bpd), or 2% of global demand, in January to support the market.
“We as a group do not want to give the markets any excuse to react negatively,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the start of a virtual meeting of an OPEC+ panel, the Joint Ministerial Monitoring Committee (JMMC).
Saudi Arabia, the world’s biggest oil exporter, has indicated it wants a tighter policy in 2021 to draw down inventories still bulging since demand tumbled this year.
But other big producers, such as Iraq, have failed to deliver fully on promised cuts and have signalled they want some leeway to produce more oil next year.
“The markets will not be kind to those who do not stick to agreements. This is why we must be prepared to act according to the requirements of the market. I recently said we must be ready to tweak the terms of our agreement if need be,” the Saudi minister said.
The JMMC can recommend policy steps to OPEC+, which agreed record oil cuts earlier this year. The group holds a full meeting of all ministers on Nov. 30 and Dec. 1 to decide policy.
Russian Deputy Prime Minister Alexander Novak said Russia would stick to its obligations under the OPEC+ deal and said the market had reached stability thanks to joint efforts. But he did not say if Moscow was willing to extend cuts.
An option gaining support among OPEC+ nations is to keep the existing cuts of 7.7 million bpd for a further three to six months, OPEC+ sources said, rather than tapering the reduction to 5.7 million bpd in January.
Oil slipped further below $44 a barrel on Tuesday, although hopes for a COVID-19 vaccine and expectations of further action by OPEC+ are lending support. [O/R]
