Crunch meeting of oil alliance over cuts in output

Brent crude, the global benchmark, has lost about 10 per cent in the past two weeks but has mostly stayed above the $40 per barrel level.. (Shutterstock)
Short Url
Updated 16 September 2020

Crunch meeting of oil alliance over cuts in output

  • Projections for 2020 crude demand have been downgraded in the past couple of days

DUBAI: Energy ministers from OPEC+, the oil alliance led by Saudi Arabia and Russia, are preparing for a crucial meeting on Thursday amid signs that the recovery in global oil markets is slowing down because of a resurgence in the COVID-19 pandemic.
Projections for 2020 crude demand have been downgraded in the past couple of days by two authoritative sources — the Organization of Petroleum Exporting Countries (OPEC) itself, and the International Energy Agency (IEA).
In addition to new COVID lockdowns, the IEA blamed teleworking and weak air travel for the downturn in crude demand in “even more fragile” markets.
Brent crude, the global benchmark, has lost about 10 per cent in the past two weeks but has mostly stayed above the $40 per barrel level.
According to OPEC sources, ministers are considering whether to take further proactive measures now on oil supply to head off a possible excess this autumn, or to stick with the regime of cuts, compliance and compensation that has brought oil supply closer to rebalance.
The price of crude has more than doubled since the market chaos of April before the current OPEC+ regime took effect.
Traders were spooked by figures this week that showed the UAE, one of the staunchest advocates of the compliance policy, missed the OPEC+ targets by a wide margin.
Abu Dhabi said the lapse was temporary because of increased domestic seasonal demand, and promised to compensate next month. Overall compliance with the cuts has been unprecedented.
Energy analyst Robin Mills, chief executive of Qamar Energy consultancy, said he believed OPEC+ would “hold the line” at the current level of cuts.


Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

Updated 27 September 2020

Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

  • Energy ministers will also discuss plans for ‘green’ economic recovery from ravages of coronavirus pandemic

DUBAI: Energy ministers from the G20 countries under the presidency of Saudi Arabia will meet virtually on Sunday to discuss volatile oil markets and plans for a “green” recovery from the economic shock of the COVID-19 pandemic.

The Kingdom is strongly backing a “circular carbon economy” strategy to remove harmful greenhouse gas emissions from the atmosphere.

The two-day event is the second time this year that energy policymakers have come together, following the historic meeting last April that helped stabilize crude markets in meltdown.

Markets have since recovered and the price of benchmark Brent crude has more than doubled, but doubts about their resilience have resurfaced amid fears of a “second wave” of economic lockdowns.

Prince Abdul Aziz bin Salman, the Saudi energy minister and chairman of the G20 event, has highlighted the need for tight discipline by members of the OPEC+ oil producers’ alliance to combat market “uncertainty.” 

“If we are serious about mitigating the impact of the shock and navigating through these extraordinary times, this is our only path,” he said.

The G20 said ministers would discuss ways to “strengthen collaboration toward market stability and security and discuss promoting and advancing sustainable energy systems through the Circular Carbon Economy platform,” and address “advancing universal access to energy and clean cooking for all.”

There is consensus on the need to mitigate harmful emissions, but some European countries and nongovernmental organizations are believed to be pressing for a stronger stance on fossil fuels.

The Saudi strategy, supported by the US and Russia, is for a more inclusive stance on hydrocarbon resources, while simultaneously promoting renewable sources such as solar and wind.