New Saudi Energy Minister Calls for OPEC 'Cohesiveness'

PostThu Sep 12, 2019 6:43 am

VOA - Vietnam News


DUBAI, UNITED ARAB EMIRATES - Saudi Arabia's new energy minister on Thursday reiterated calls for "cohesiveness" in OPEC ahead of a key meeting in Abu Dhabi.


"To achieve market stability, it's imperative we maintain a high degree of cohesiveness within OPEC and within also our partners in OPEC," said Prince Abdulaziz bin Salman, speaking at a meeting of the organization's Joint Ministerial Monitoring Committee in Abu Dhabi, the capital of the United Arab Emirates.  
 
Russian Energy Minister Alexander Novak similarly called for unity in cuts, though estimates show Moscow went over its voluntary cap as well.
 
Fueling concerns Thursday, a report by the Paris-based International Energy Agency warned that growth continued to weaken amid "uncertainty around the global economy, and particularly trade."
 
"The challenge of market management remains a daunting one well into 2020," the agency said.
 
"A reminder to the producers that competition for market share is getting tougher comes from preliminary data showing that in June the U.S. momentarily overtook Saudi Arabia and Russia as the world's No. 1 gross oil exporter," the report added.
 
Later Thursday in Abu Dhabi, officials from Iraq and Nigeria pledged to come into compliance in the coming months, drawing applause at a news conference after the meeting.
 
A statement by the committee said that there was 136% compliance with the accord last month.
 
Crude oil sold for over $100 a barrel in the summer of 2014 before bottoming out below $30 a barrel in January 2016. That fall largely came from a boom in U.S. shale oil and countries like Saudi Arabia keeping their production high to hold onto market share.
 
Hoping to boost prices, OPEC partnered with non-OPEC nations like Russia to lower their production beginning in 2017, the first such cut for the cartel in a decade. It reduced production by 1.2 million barrels per day, with 800,000 coming from OPEC and 400,000 coming from non-OPEC members.
 
That deal helped push prices back up, becoming what Prince Abdulaziz this week described as an arrangement "til death do us part."
 
But the accord does not include America, which was the world's top oil producer in 2018, according to the U.S. Energy Information Administration.
 
President Donald Trump has been pushing both OPEC and ally Saudi Arabia in tweets to keep prices low as well, mindful of how gasoline prices can swing elections in America. The average price for a gallon of regular gasoline in the U.S. is $2.56, down from $2.83 a year ago, according to AAA.
 
Tensions between Iran and the U.S., while sparking temporary spikes in the oil market, have not caused sustained higher prices. Some OPEC members like Iraq and Nigeria, continue increase production. Meanwhile, there's lower estimated demand going into 2020.
 
 "A combination of new tariffs being imposed by China and the US, weakening data from major economies and uncertainty over the next steps from central banks all worked to weigh on the outlook for crude oil, particularly for demand in the coming months," wrote Edward Bell, an commodities analyst for Dubai-based Emirates NBD.
 
But a cut, while it could boost prices, could hurt the ones who need the money most. OPEC-heavyweight Saudi Arabia, which noticeably has cut into its production to help sustain the deal, needs more oil revenue to help support Crown Prince Mohammed bin Salman's ambitious "Vision 2030" plans.
 
Benchmark Brent crude traded above $61 on Thursday before the meeting.
 
OPEC has its next major meeting in December in Vienna where it could ratify further cuts.

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