Support grows for deeper OPEC+ oil output cuts

Azerbaijan’s energy minister said coronavirus concerns are excessive, adding to a growing group of officials who believe that markets are overreacting. (AFP)
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Updated 10 February 2020

Support grows for deeper OPEC+ oil output cuts

  • Azerbaijan is likely to support a provisional cut of 600,000 barrels per day, says country’s energy minister

BAKU: Azerbaijan is likely to support further oil output cuts by OPEC and its allies, the ex-Soviet country’s energy minister said, should the move be necessary to balance demand fears after a coronavirus outbreak in China.

A technical panel that advises the Organization of the Petroleum Exporting Countries and its allies led by Russia, the group known as OPEC+, proposed this week a provisional cut of around 600,000 barrels per day (bpd).

“Azerbaijan is likely to support this,” Parviz Shahbazov told Reuters in an interview. Azerbaijan is not an OPEC member but is part of the OPEC+ group informally established in 2016.

Although Azerbaijan is not a big contributor to the overall cuts by OPEC+, its position may shed light on Russia’s thinking as non-OPEC members of the group usually take a unanimous decision. Moscow is yet to give its nod to the further cuts.

Producers in the OPEC+ group are scheduled to meet in Vienna on March 5-6, although the meeting could be brought forward depending on how the coronavirus outbreak affects oil prices going forward. Brent dropped below $55 a barrel on Friday.

However, Shahbazov said he believed that the impact of the coronavirus might be short-lived, adding to a small number of other officials and market players who believe that markets are overreacting.

“At this stage, the effect of coronavirus is temporary and I do not see global threats, but I do not rule out that there may be further (oil output) cuts,” he said. “We can meet earlier than March if necessary although there is no such need so far.”

The death toll from the coronavirus outbreak in China rose above 800 on Sunday, surpassing the number killed globally by Severe Acute Respiratory Syndrome across 2002 and 2003.

Shahbazov said that oil output in Azerbaijan was around 770,000 bpd last month, in line with its OPEC+ quota.

The country has a balanced budget based on an oil price of $55 per barrel but can withstand a temporary dip to $40, Shahbazov said.

Baku, which plans to start gas exports to Europe, has also signed deals with Saudi Arabian energy company ACWA Power and United Arab Emirates’ Masdar to expand in renewable energy.

Shahbazov said the firms would invest around $400 million to build wind and solar power plants with a total capacity of 440 megawatts. Construction is due to start in September and last two years.


Saudi minister: OPEC+ will take responsible approach to virus

Updated 26 February 2020

Saudi minister: OPEC+ will take responsible approach to virus

  • Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter

RIYADH: Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partner oil-producing nations, the so-called OPEC+ group, would respond responsibly to the spread of the coronavirus.

He also said Saudi Arabia and Russia would continue to engage regarding oil policy.

“Everything serious requires being attended to,” the minister, Prince Abdul Aziz bin Salman, told reporters at an industry conference in Riyadh.

An OPEC+ committee this month recommended the group deepen its output cuts by an additional 600,000 barrels per day.

Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter.

The minister said he was still talking with Moscow and that he was confident of Riyadh’s partnership with the rest of the OPEC+ group.

“We did not run out of ideas, we have not closed our phones. There is always a good way of communicating through conference calls,” he said.

Regarding the coronavirus, which has impacted OPEC member Iran, he said OPEC+ members should not be complacent about the virus but added he was confident every OPEC+ member was a responsible and responsive producer.

The flu-like SARS-CoV-2 virus, which first broke out in China, has now spread to more than 20 countries.

“Of course there is an impact and we are assessing, but we’ll do whatever we can in our next meeting and we’ll address that issue,” UAE Energy Minister Suhail Al-Mazrouei said at the same industry conference.

Saudi Aramco CEO Amin Nasser on Monday said he expected a short-lived impact on oil demand.

“We think this is short term and I am confident that in the second half of the year there is going to be an improvement on the demand side, especially from China,” he said.

Oil climbed on Tuesday as investors sought bargains after crude benchmarks slumped almost 4 percent in the previous session, although concerns about the global spread of the virus capped gains.