Oman’s Energy Ministry said on Sunday that Opec+ decisions are based on purely economic considerations and realities of supply and demand in the market.
“The recent decision of Opec+ to cut production is in line with its previous decisions in terms of its reliance on market data and its variables, which was important and necessary to reassure the market and support its stability,” the ministry tweeted on Sunday.
“The working mechanisms of the Opec+ group require that its decisions be taken by consensus and unanimity of all member states.”
Endorsing the Opec+ decision to cut oil production by two million barrels a day in November, Bahrain's Minister of Oil and Environment, Special Envoy for Climate Affairs, Mohamed bin Mubarak bin Dainah said the decision comes after consensus among all members states in the alliance.
“The decision was made following specialised technical studies related to global oil market developments,” he said.
The 23-member Opec+ alliance agreed to slash its November output by 2 million barrels per day, its biggest production cut since the start of the coronavirus pandemic in 2020.
Starting in November 2022, the group will reduce its overall production by 2 million bpd from the August 2022 required production levels, Opec+ said in a statement after the group’s first in-person meeting in Vienna since March 2020.
Oman is not a member of Opec but is part of the 23-member Opec+ alliance.
Sultan Haitham, Ruler of Oman, earlier this year said that the country planned to use revenue from rising oil prices to reduce its public debt and support spending on government projects, while ensuring inflation does not affect basic commodity prices.
Oman, a small crude producer compared with its Gulf neighbours, is more sensitive to oil-price swings and was hit hard by the pandemic. However, higher oil prices, along with fiscal reforms, helped to narrow the government deficit.
The output cut decision was made in “[the] light of the uncertainty that surrounds the global economic and oil market outlooks, and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive and pre-emptive”, Opec+ said.
The move is the latest effort by the oil producers’ alliance to support prices as a potential economic slowdown weighs heavily on the outlook for fuel demand.
Brent, the benchmark for two thirds of the world’s oil, slipped 3.11 per cent to settle at $91.63 a barrel on Friday. West Texas Intermediate, the gauge that tracks US crude, closed down 3.93 per cent to $85.61 a barrel.
“We will make sure that we have a balanced market and if we have to do more, we will do more … We are looking at long-term,” Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure, said at the post-meeting press conference.
“What is important to us is bringing the investment [and] the sustainability of this market.”
Opec+ is “here to stay as a moderating force to bring about stability”, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said at the conference.
“Energy is something that can never be attended to in short-term tweaks and moves … the world energy markets need attendance, careful planning and investments.”
Since peaking close to $140 a barrel in March, prices have retreated to about $90 a barrel this October as markets grow anxious about demand going into 2023.
The Opec+ alliance agreed in the spring of 2020 to cumulatively cut crude output by a record 9.7 million bpd as it faced a coronavirus-induced crash in oil prices. The alliance then gradually unwound the cuts over the past two years.
Growing fears of a global recession, a strong US dollar, surging inflation and monetary tightening by central banks around the world have continued to weigh on the market since June.