Saudi Arabia steps up oil diplomacy ahead of OPEC meeting

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Saudi Energy Minister Khalid al-Falih. (AFP)
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Updated 22 November 2017
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Saudi Arabia steps up oil diplomacy ahead of OPEC meeting

VIENNA: Saudi Energy Minister Khalid Al-Falih and his staff are busy these days. The minister and some of his aides are in continuous talks with global producers to convince them to attend the meeting of OPEC in Vienna on Nov. 30.
Saudi officials are inviting more African, Latin American and Central Asian countries to attend the meeting, sources told Arab News. The list of invitees includes producers such as Colombia, Egypt and Indonesia. “Not all those who are invited will attend but many have shown interest in attending the meeting as observers only,” a source said.
Saudi Arabia and Russia are leading global efforts to extend the current agreement to curtail production of 24 countries by 1.8 million barrels a day to rebalance the oil market and bring global inventories back to their five-year average. The agreement, which will expire in March, has helped to raise oil prices in the past few days to levels not seen since 2015.
The Saudi OPEC governor and Saudi national representative at OPEC are in communication with many countries to invite them to the meeting. They are traveling extensively to meet officials and other producers. Saudi Arabia is the president of OPEC’s ministerial conference this year.
“The Saudis are looking at ways to surprise the market at the meeting and by bringing many producers to it they are hoping to show the market that more producers are supporting the agreement,” a source said. “If some of those attending are willing to participate in the agreement then that would support oil prices.”
So far, the Saudi energy minister has brought two central Asian producers to attend the next meeting: Uzbekistan and Turkmenistan. Since October, the minister has also made trips to four countries that are part of the agreement to deliver letters from King Salman to the heads of states: Iraq, Malaysia, Algeria, and Kazakhstan.
Adding more countries to the agreement will help to reduce the burden on existing ones as the total amount of cuts will be distributed among a bigger number of producers, one of the sources said.
OPEC is expected to agree an extension of the cut as storage levels remain high despite recent drawdowns, although there are doubts about the willingness of some participants to continue to restrain output.
Many countries are showing support for extending the agreement. UAE and Iran are the latest two countries to express their support.
UAE Energy Minister Suhail Al-Mazrouei said on Nov. 20 that he sees the logic for extending the agreement and ministers are now focusing on the extension and not on increasing the amount of cuts in the agreement.
Iran’s oil minister Bijan Zanganeh said on the same day that the majority of OPEC nations favors the extension of the agreement.
Oil markets were tepid on Nov. 20 as traders were reluctant to take on big new positions before the OPEC meeting at the end of the month.
“The market expectation is for an extension through 2018, created by OPEC comments early this fall,” US bank Morgan Stanley said on Nov. 20 in a note to clients. “There is increased risk that OPEC delays the extension decision,” it said.


‘Get prices down’ Trump tells OPEC

Updated 20 September 2018
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‘Get prices down’ Trump tells OPEC

  • Trump highlights US security role in region
  • Comments come ahead of oil producers meeting in Algeria

LONDON: US president Donald Trump urged OPEC to lower crude prices on Thursday while reminding Mideast oil exporters of US security support.
He made his remarks on Twitter ahead of a keenly awaited meeting of OPEC countries and its allies in Algiers this weekend as pressure mounts on them to prevent a spike in prices caused by the reimposition of oil sanctions on Iran.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” he tweeted.
“We will remember. The OPEC monopoly must get prices down now!”
Despite the threat, the group and its allies are unlikely to agree to an official increase in output, Reuters reported on Thursday, citing OPEC sources.
In June they agreed to increase production by about one million barrels per day (bpd). That decision was was spurred by a recovery in oil prices, in part caused by OPEC and its partners agreeing to lower production since 2017.
Known as OPEC+, the group of oil producers which includes Russia are due to meet on Sunday in Algiers to look at how to allocate the additional one million bpd within its quote a framework.
OPEC sources told Reuters that there was no immediate plan for any official action as such a move would require OPEC to hold what it calls an extraordinary meeting, which is not on the table.
Oil prices slipped after Trumps remarks, with Brent crude shedding 40 cents to $79 a barrel in early afternoon trade in London while US light crude was unchanged at about $71.12.
Brent had been trading at around $80 on expectations that global supplies would come under pressure from the introduction of US sanctions on Iranian crude exports on Nov. 4.
Some countries has already started to halt imports from Tehran ahead of that deadline, leading analysts to speculate about how much spare capacity there is in the Middle East to compensate for the loss of Iranian exports as well as how much of that spare capacity can be easily brought online after years of under-investment in the industry.
Analysts expect oil to trend higher and through the $80 barrier as the deadline for US sanctions approaches.
“Brent is definitely fighting the $80 line, wanting to break above,” said SEB Markets chief commodities analyst Bjarne Schieldrop, Reuters reported. “But this is likely going to break very soon.”