Because Saudi Arabia raises the pressure on OPEC +
How Saudi Arabia moves on oil
Saudi Arabia has raised pressure on oil producers amalgamated in the OPEC plus deal who are failing to meet their commitments to reduce crude oil production as part of the alliance's agreement reached in April to make massive cuts in their production and support prices. For this reason, the oil ministers of the cartel, which gathers OPEC and non-OPEC countries, met again this week to check compliance with the cuts in the wake of the concern that a global economic recovery could be held back by a second wave of pandemic from Covid -19.
SAUDI ARABIA WARNS THOSE WHO DO NOT MAKE CUTS
According to reports from the Financial Times , Prince Abdulaziz bin Salman, Saudi energy minister, warned those who 'use tactics to overproduce and hide non-compliance', used 'many times in the past and always end in failure. They get nothing and damage our reputation and credibility '”. Although he did not give precise names, "Prince Abdulaziz made his remarks seated next to Suhail Al Mazrouei, the UAE Minister of Energy, who in recent months has been among the countries that have produced in excess of hundreds of thousands of barrels, ”continued Ft.
"The JMMC (Joint Ministerial Monitoring Committee) noted that the recovery did not occur worldwide and an increase in COVID-19 cases appeared in some countries – reads an OPEC statement taken up by Cnbc -. "In the current context, the JMMC stressed the importance of being proactive and preventative and recommended participating countries to be willing to take further necessary measures when needed." OPEC + did not announce further production cuts during Thursday's meeting, in line with analysts' expectations but the JMMC "reiterated the fundamental importance of adhering to full compliance and offsetting excess volumes as soon as possible" .
SLOWER RECOVERY
Russian Energy Minister Alexander Novak described the slower-than-expected increase in demand as "alarming". While Riyadh's renewed push on the sector involves the implementation of so-called "catch-up" cuts promised by producers who failed to meet their targets between May and July, particularly in Iraq and Nigeria, Ft points out.
PRICES IN SWING
Meanwhile, crude oil prices rose after the OPEC + meeting in line with the group's intent of the agreement, namely to cut 7.7 million barrels per day until the end of the year to raise crude oil prices. Brent and the WTI. Even if a downward rebound occurred.
POSSIBLE FURTHER INTERVENTIONS
Although Prince Abdulaziz refused to comment on any further actions in the coming months to stabilize the market to maintain the surprise effect, Ft pointed out, some reports have hinted at the possibility of new steps being taken to restrict the supply on the market, according to what reported by Axios. The joint declaration in effect stressed the need to weigh "further measures needed when necessary".
"Although Opec + has not proposed any changes to the current supply cut agreement … the producer group has given the impression that it does not want to sweep the problems under the rug," Rystad Energy's Bjornar Tonhaugen said in a statement. .
However, VI Investment Corp. analyst Will Sungchil Yun told Bloomberg that although the meeting helped prices, the effect "could be temporary, as there needs to be a strong and consistent signal that a real recovery of demand is actually taking place ".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/perche-larabia-saudita-alza-la-pressione-su-opec/ on Sun, 20 Sep 2020 05:14:11 +0000.