Home / Oil & Energy / Oil & Companies News / Saudi Arabia, Kuwait say other OPEC+ members’ struggles won’t push them to bust quotas

Saudi Arabia, Kuwait say other OPEC+ members’ struggles won’t push them to bust quotas

OPEC stalwarts Saudi Arabia and Kuwait on Nov. 15 indicated again they were unwilling to increase their crude oil production above their quotas to make up for other members’ shortfalls and ease the upward pressure on prices.

Saudi energy minister Prince Abdulaziz bin Salman told S&P Global Platts that the kingdom has “very comfortable” spare production capacity but that he saw no need to put additional supplies onto the market beyond what OPEC and its allies have already agreed.

The recent gas and electricity crunch in Europe and Asia has been pulling up crude prices with some power plants switching fuels to oil, but there is no shortage of oil in the market, he said on the sidelines of the ADIPEC conference in Abu Dhabi.

“Saudi Arabia has demonstrated to the world that we always come to the rescue of the world if it is needed,” he said. “The problem is, it is not an issue of oil, it is an issue of gas, LNG, coal, and the availability of electricity. This is the most unfortunate part that people are not relating to. And they are trying to throw the problem on oil when oil is the least source of the problem.”

OPEC, Russia and nine other partners on Nov. 4 reaffirmed their plans for a modest 400,000 b/d production hike in December, rebuffing complaints from key customers the US, Japan and India that the alliance should pump more.

Dated Brent is up about 64% in 2021, with Platts assessing the benchmark at $82.65/b on Nov. 12, though that pales in comparison to the volatility seen in the gas market, where the JKM spot LNG marker hit a record high of $56.33/MMBtu in October but slid to $30.79/MMBtu on Nov. 12 — still well above historic levels.

Energy transition concerns
Indian oil minister Hardeep Singh Puri said he remained concerned about high prices, though his focus was more on the long-term trajectory of the market through the energy transition.

India, a major driver of global energy demand growth, was one of the most vocal countries at the recently concluded UN Climate Change Conference in altering the agreement to be more accommodative of fossil fuels — a stance that put it in alignment with OPEC+ members, who said the focus should be more on emissions reduction than phaseouts of coal, oil and gas.

“You have to manage the transition,” Puri said at ADIPEC. “For countries like India, clearly if the transition results in costs being imposed on the consumer, the transition becomes that much more difficult to manage.”

In reality, several OPEC+ members, including most notably Angola, Nigeria and Malaysia, have been unable to produce up to their quotas, due to aging fields, underinvestment exacerbated by the pandemic, or internal disruptions, making the actual collective OPEC+ increases less than intended.

Platts’ latest OPEC+ production survey showed that quota compliance rose in October to 113%, with the alliance pumping some 600,000 b/d short of its collective targets.

OPEC kingpin Saudi Arabia itself has produced below its allocation in recent months, self-reporting October output of 9.78 million b/d, compared to its cap of 9.81 million b/d. It claims a production capacity of about 12 million b/d.

Kuwait said its output was 2.50 million b/d in the month, just under its quota of 2.51 million b/d.

As they did at their Nov. 4 meeting, OPEC+ ministers said they would respect every member’s allocations and not try to steal market share from each other.

OPEC+ harmony
Prince Abdulaziz said he wanted to be “very respectful” to the group, while Kuwaiti counterpart Mohammed al-Fares said infringing on quotas could disrupt the coalition’s harmony and risk ending the supply pact entirely. OPEC+ ministers will next meet Dec. 2 to debate another 400,000 b/d increase for January, under the plan to gradually eliminate the historic output cuts implemented early in the pandemic.

“My understanding, some of the countries are doing their best to make sure that they have enough production to the market,” Fares told reporters at ADIPEC.

UAE energy minister Suhail al-Mazrouei said he would leave any decisions on the OPEC+ agreement to discussions within the group.

“The UAE is a member of an organization called OPEC+, and we will always work within this organization,” he told Platts.

Several ministers have noted that many forecasts indicate that the market will flip from a supply deficit to surplus in the coming months, due to seasonal consumption factors and the onset of winter refinery maintenances.

That has led to some speculation that the OPEC+ alliance may actually pause its monthly production increases.

Prince Abdulaziz, however, said he hopes it does not come to that.

“We are hoping that the world economy continues growing, and therefore the demand will grow, too,” he said. “Let’s all try to be optimistic, because this is what we need.”
Source: Platts

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping
error: Content is protected !!