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Saudi Arabia urges greater compliance with OPEC+ oil cuts as talks begin in Vienna

Saudi energy minister Prince Abdulaziz bin Salman on Friday exhorted his OPEC+ counterparts to adhere to their production cut commitments and deliver a deal “in a convincing way.”

“Further conformity will only allow us all to benefit from what we want to achieve,” he said in an opening speech before the OPEC+ coalition began talks over a new supply accord that officials said could deepen existing cuts by some 40% to about 1.7 million b/d through the first quarter of 2020.

He asked members “not to pretend and create any loopholes that are not there.”

Negotiations Thursday between OPEC members lasted more than six hours and turned acrimonious, with Angola threatening to quit the organization and Iraq also playing hardball over tighter quotas, according to delegates.

“The problem was more mathematics,” Iranian oil minister Bijan Zanganeh told reporters.

The deeper cuts are seen as necessary to avoid a market surplus in the coming months, with many countries needing higher prices to balance their budgets and Saudi Arabia seeking to support the initial public offering of its state oil company.

“In all our deliberations, we will all try to figure out not only what to do, but what to do in a convincing way that assures the market and not only assures the objective analysts, but also the cynical analysts that we’re doing our job properly,” Prince Abdulaziz said.

The media, he added, should “have faith and have mercy on us.” Ministers and delegates were “squashing their heads, squeezing their brains, trying to deliver us to a good agreement, with good continuity to what we are all firm believers in,” he said.

Saudi Arabia, which has been overcomplying with its production cuts to lead the coalition by example, has pressured other less compliant members, including Iraq and Nigeria, to bring their output in line with their quotas and stop free-riding on its efforts.

Russia, the main non-OPEC partner in the deal, has also struggled to meet its cut commitments but may benefit from a change to its quota that will exclude its condensate production.

Its energy minister, Alexander Novak, praised the OPEC+ cuts of the last three years with helping to stabilize oil prices and said the coalition needs to now “take first concrete steps” on a new deal.

“I think it is important today to send a clear message and show next steps,” he said in his opening speech. “All eyes are on us. It’s a serious responsibility.”
Source: Platts

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