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

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.

The Prince said that 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.

Under-complying countries have agreed to cut more crude in future to compensate, but the Prince 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.

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.

“There is no other choice or panacea. This is the only effective medicament to see us through these challenging times,” Prince Abdul Aziz said.

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 more lost ground to edge near $43 a barrel.