DUBAI: Saudi Arabia plans to use its presidency of the powerful G20 group of nations in efforts to restore balance to global oil markets.
The Kingdom is organizing a special meeting of G20 energy ministers — including the other two biggest producers, the US and Russia — to discuss cuts to output.
The “virtual” summit is scheduled for Friday, the day after an OPEC+ meeting of oil producers. Crucially, the US, which is not an OPEC member, will be involved in the G20 summit, energy secretary Dan Brouillette said.
The initiative emerged after a weekend phone call between Prince Abdul Aziz bin Salman, the Saudi energy minister, and Fatih Birol, executive director of the International Energy Agency. The involvement of the G20 is part of the group’s remit, Birol told Arab News on Monday.
“The job description of the G20 is to provide and maintain financial stability, so it is in line with their aims,” he said.
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“The oil industry is going through one of the worst times in its history, and this could have major implications for the global economy, financial markets and employment. Saudi Arabia has been a stabilizing factor in the markets for many years.”
Saudi Arabia and Russia were “very, very close” to a deal to cut oil output, said Kirill Dmitriev, chief executive of the Russian Direct Investment Fund and a close confidant of President Vladimir Putin. An agreement would “bring so much important stability to the market,” he said.
Nevertheless, significant challenges remain. So far, talks between OPEC+ members have focused on a cut of about 10 million barrels per day. This would not be enough to outweigh global market oversupply estimated at more than 20 million barrels, amid a demand slump caused by the coronavirus pandemic.
There are also concerns about whether US producers would be permitted to take part in cuts. American antitrust law prohibits cartel practices, which would rule out a concerted move by its many oil companies.
Some energy experts have suggested that action by the Railroad Commission of Texas, which regulates the energy business in the biggest US oil state, could help limit overall US output.
On the markets, amid the continuing uncertainty, Brent crude was trading about 5 percent down, at just over $32.