Saudi Arabia makes hard-hitting call for full OPEC+ compliance on cuts

Saudi Arabia makes hard-hitting call for full OPEC+ compliance on cuts
Prince Abdul Aziz warned nations to comply with oil cuts during a meeting of an OPEC+ ministerial committee. (Twitter)
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Updated 18 September 2020

Saudi Arabia makes hard-hitting call for full OPEC+ compliance on cuts

Saudi Arabia makes hard-hitting call for full OPEC+ compliance on cuts
  • Energy minister Prince Abdul Aziz warns: ‘compliance is not an act of charity’
  • Only six of the OPEC+ members had stuck to agreed production levels to stabilize market

DUBAI: Saudi Arabia has called on its partners in the OPEC+ alliance to be vigilant, disciplined and transparent in their commitment to the oil cuts agreement that have brought global crude back from the chaos of earlier this year.

In hard-hitting opening remarks, Prince Abdul Aziz bin Salman, the Kingdom’s energy minister, said it was essential for all members of the 23-strong organization to comply fully with the terms of their agreements.

“Full compliance is not an act of charity. It is an integral part of our collective effort to maximize the interest and gains of every individual member of this group. And compliance is a sovereign decision that we have all taken willingly and responsibly,” he told delegates at the monthly virtual meeting of the Joint Ministerial Monitoring Committee (JMMC) that oversees OPEC+ affairs.

The meeting had heard a technical report showing that only six of the OPEC+ members had stuck by agreed production levels in the period from May to August.

Saudi Arabia cut by far the biggest amount in that period, while the UAE - traditionally a diligent conformer to OPEC+ agreements - missed its production targets by a significant amount, which has widened over the past two months.

But the overall level of compliance to the cuts was at a historical high level in August, with 101 per cent conformity among all OPEC+ members.

The Prince said a “key lesson of the past few weeks is that being transparent with the market, and with this group, about production and compliance always pays off.

“Attempts to outsmart the market will not succeed, and are counter-productive, when we have the eyes, and the technology, of the world upon us,” he added.

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In a meeting with journalists, Suhail Al-Mazrouei, the UAE energy minister who was seated alongside the Saudi Prince in Riyadh, reaffirmed his full support for the OPEC+ commitments. “We have always been a transparent and full partner to all out colleagues in these agreements,” he said.

Prince Abdul Aziz said he wanted to “dispel any concerns that may have been assumed by analysts, the media or the market” about the UAE’s commitment to the OPEC+ cuts.  

Under-complying countries, including the UAE, have agreed to cut more crude in the future to compensate for past shortfalls, but Prince Abdul Aziz warned: “The compensation mechanism was not established as a substitute for full compliance, nor to encourage non-compliance. Not fully complying, and then compensating, should not become the norm.”

He added he would like to see the compensation scheme ended this year, and the JMMC was considering that possibility.

Some analysts had expected the OPEC+ meeting to agree to reverse some of the increases brought in under phase two of the historic April cuts deal, but this was never under serious consideration.

“In the face of uncertainty, the market will be increasingly looking to us for direction. We must demonstrate that we are disciplined and fully committed to our agreement, and as a group we are pro-active and pre-emptive, and ready to act when it is needed,” Prince Abdul Aziz said.

“There is no other choice or panacea. This is the only effective medicament to see us through these challenging times,” he added.

Prince Adbul Aziz had a blunt message for speculators looking to make profits in volatile trading. “To those who want to short the market, I say - make my day.”

The strong Saudi message to OPEC+ was echoed by the Russian energy minister, Alexander Novak, who said: “I urge everyone to continue sticking to this and to maintain the high level we have achieved.”

Global oil prices, which have been under pressure in recent weeks on fears of a COVID-19 resurgence and falling oil demand, recovered some lost ground to trade over $43 a barrel.

 


WEF: Coronavirus to remain ‘clear and present danger’

WEF: Coronavirus to remain ‘clear and present danger’
Updated 3 min 59 sec ago

WEF: Coronavirus to remain ‘clear and present danger’

WEF: Coronavirus to remain ‘clear and present danger’
  • Disease the top risk to global security and livelihoods over the next two years
  • ‘The immediate human and economic cost of COVID-19 is severe’

DUBAI: The risk from infectious diseases remains a “clear and present danger” even as vaccines are being rolled out to counter the effects of the coronavirus disease (COVID-19) pandemic, according to the World Economic Forum (WEF).

In its latest annual Global Risk Report, most respondents said that disease was the top risk to global security and livelihoods over the next two years.

In the medium to long term, they were worried about financial crises in the shape of asset bubbles arising from the pandemic economic crisis, and over the next 10 years the “existential threat” of weapons of mass destruction was the biggest fear.

In the gloomiest risk report for many years, the WEF said: “The immediate human and economic cost of COVID-19 is severe. It threatens to scale back years of progress on reducing poverty and inequality and to further weaken social cohesion and global cooperation.

“Job losses, a widening digital divide, disrupted social interactions, and abrupt shifts in markets could lead to dire consequences and lost opportunities for large parts of the global population.

“The ramifications — in the form of social unrest, political fragmentation, and geopolitical tensions — will shape the effectiveness of our responses to the other key threats of the next decade; cyberattacks, weapons of mass destruction and, most notably, climate change,” it added.

Environmental issues were also a key concern of respondents to the risk survey, with the likelihood of extreme weather, climate change failure, and human environmental damage the top three risks rated most likely.

Klaus Schwab, the founder and executive chairman of the WEF, and Saadia Zahidi, its managing director, said that the WEF had been warning of the danger of pandemics since 2006.

“In 2020, the risk of a global pandemic became reality. As governments, businesses, and societies survey the damage inflicted over the last year, strengthening strategic foresight is now more important than ever.

“In some cases, disparities in health outcomes, technology, or workforce opportunities are the direct result of the dynamics the pandemic created. In others, already present societal divisions have widened, straining weak safety nets and economic structures beyond capacity,” they added.

Some countries in the Middle East have handled the pandemic crisis relatively well, the WEF said. “Capacities and responses varied greatly but relatively young populations may have spared the region from higher death tolls; however, data in some locations are uncertain.

“Some nations with advanced medical systems and regimes able to enforce lockdowns and other social restrictions along with border controls have managed successive waves of infections.

“Other, poorer nations, and those that are fragile and in conflict situations, however, are suffering exacerbated economic and humanitarian challenges,” the report said.

The WEF highlighted the problems of young people, whom it labelled “pandemials.” It said: “The world’s youth have faced exceptional pressures in the past decade and are particularly vulnerable to missing out altogether on the opportunities of the next.”