Oil coup for Saudi Arabia as output cuts are extended

Saudi Arabia's Energy Minister Prince Abdul Aziz bin Salman. The Kingdom pulled off a coup in the world of oil diplomacy with an agreement to extend the historic output cuts credited with pulling energy markets out of chaos. (Screenshot)
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Updated 07 June 2020

Oil coup for Saudi Arabia as output cuts are extended

  • ‘Compliance is vital,’ Prince Abdul Aziz says

DUBAI: Saudi Arabia pulled off a coup in the world of oil diplomacy on Saturday with an agreement to extend the historic output cuts credited with pulling energy markets out of chaos.

At a virtual meeting of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russia, 23 exporters agreed to roll over the record-breaking cuts until the end of July, with a monthly option to renew the agreement after that.

The deal has strict provisions against producers who fail to comply. Some countries, notably Iraq and Nigeria, have been accused of ignoring the agreed caps on crude production.

“Effective compliance is vital if we are to secure the hard-won stability in global oil markets and restore confidence in the unity and effectiveness of the OPEC+ group,” said Prince Abdul Aziz bin Salman, the Saudi Energy Minister. “This stability and positive market sentiment will bring its own rewards.”


OPEC+ agreed unanimously that countries that have fallen short of full compliance since May 1 will make up that shortfall over the summer months and will adhere to production limits in the future.

Compliance will be assessed at monthly ministerial monitoring meetings until the end of the year. “We must be vigilant. Each of the 23 countries represented here must be on guard for any signs of backsliding from their commitments,” Prince Abdul Aziz said.


“All OPEC+ partners must deliver on their pledges for the collective pledges to be sustained. Each country has to adhere to its commitment to restrain production along the agreed guidelines.”

The minister referred to the recent “low point” when American crude briefly traded below zero, but said the OPEC+ deal, bolstered by extra voluntary cuts from Saudi Arabia, the UAE and Kuwait, had helped the global market over the worst.


Brent crude, the global benchmark, has more than doubled in price since the cuts took effect. “Demand is returning as big oil-consuming economies emerge from pandemic lockdown,” Prince Abdul Aziz said. “Through our commitment to a proactive policy, within a cohesive and collective framework, we are restoring confidence and stability to global oil markets. Today, we have grounds to be cautiously optimistic about the future.”

Energy experts welcomed the deal, but echoed the minister’s caution. “This is an important success for OPEC+. It shows ability to deliver, willingness to address discipline, and coherence in the approach,” saidChristof Ruehl of the Center on Global Energy Policy at Columbia University.

“The problem is that the more OPEC+ succeeds, the easier it becomes for private producers to enjoy the fruits of its labor.”


Minimum wage for Saudis raised to SR4,000

Ahmed Al-Rajhi. (Photo/Twitter)
Updated 24 November 2020

Minimum wage for Saudis raised to SR4,000

  • A Saudi employee earning SR3,000 or more but less than SR4,000 will only earn the company half a point in the point-based system. Those earning less than SR3,000 will not be counted at all

RIYADH: Saudi Minister of Human Resources and Social Development Ahmed Al-Rajhi has issued a decision to raise the minimum wage for Saudis registered in the Nitaqat program from SR3,000 ($800) to SR4,000.
A Saudi worker with a minimum salary of SR4,000 will be considered as one worker in the Saudization percentage of the Nitaqat program, which was introduced to promote localization of the workforce.
The program also aims to enhance jobs for Saudi nationals through aligning the quality of nationalization with a range of incentives given by the Human Resources Development Fund.
A Saudi employee earning SR3,000 or more but less than SR4,000 will only earn the company half a point in the point-based system. Those earning less than SR3,000 will not be counted at all.
Part-time Saudi employees will gain a company half point in the Nitaqat system. Flexible work system employees are calculated in the percentage of the Nitaqat program as one-third of a Saudi worker for the entity they work for, provided that they complete a total of 168 working hours and pay social insurance contributions.
The decision also applies to Saudi students residing in the Kingdom who regularly work part-time as flexible work system employees, or permanent part-time workers.