Abu Dhabi, UAEThursday 26 November 2020

Gulf states back Riyadh's call for emergency producers meeting

Iraq, Opec's second-largest producer, said a future pact should include those outside the alliance such as producers in the US, Canada and Norway

Saudi Arabia's energy minister Prince Abdulaziz bin Salman with his Russian counterpart Alexander Novak at the Opec+ meeting in Vienna in December. Reuters
Saudi Arabia's energy minister Prince Abdulaziz bin Salman with his Russian counterpart Alexander Novak at the Opec+ meeting in Vienna in December. Reuters

Gulf states backed Saudi Arabia's proposal for an emergency Opec+ meeting that could include the US, the world's largest producer, for the first time as oil prices continued to fall.

The UAE, Opec's third-largest producer, said it fully backed Riyadh's calls for a meeting of the producers, which was tentatively set for Thursday.

''A joint and combined effort by all oil-producing countries is required, not only the group of Opec+ countries, in order to address the weakness of demand in the global oil market," UAE Minister of Energy and Industry Suhail Al Mazrouei said in a statement carried by state news agency Wam.

The UAE is "confident that, if an agreement can be reached, all producing countries will work quickly and co-operatively to address the weak demand for oil in global markets, helping to rebalance the market and maintain global oil inventories at reasonable levels".

His comments come as the world's top oil producers rushed to contain a rout in oil prices, which last week rounded off the worst quarter on record.

Crude commodity benchmarks Brent and West Texas Intermediate have been in free fall, plunging to 70 per cent of their value from their most recent peak in January. The slump in oil prices has been exacerbated by a decline in demand due to the spread of the coronavirus pandemic, which coincided with a collapse in talks to deepen cuts by members of the Opec+ alliance. Global oil consumption has declined by a third after countries closed borders and enforced strict social distancing and lockdown measures to contain the outbreak.

Kuwait, the group's fourth-largest producer, also backed Saudi Arabia's push for early talks to contain the fall in oil prices.

"We totally support Saudi Arabia ... and its current efforts in bringing back Opec and non-Opec countries to the table," Kuwait's oil minister Khaled Al Fadhel told Reuters. "We always welcome efforts to stabilise the market for the benefit of producers and consumers. We are being proactive and many countries are working hard on it to make it a success."

Meanwhile, Iraq, the group's second-biggest producer, said any future output restriction pact should include producers outside the alliance such as the US, Canada and Norway.

Crude benchmarks surged by 30 per cent after US President Donald Trump's comments last week that Riyadh and Moscow were likely to resolve their differences. But prices fell again during early trading on Monday.

Brent, the most widely traded benchmark, was down 3.55 per cent trading at $32.90 per barrel at 3.22pm UAE time, while WTI was down 3.67 per cent at $27.30 per barrel.

On Saturday, Saudi Arabia dismissed remarks attributed to Russian President Vladimir Putin that the kingdom was responsible for the collapse of the Opec+ deal, and said the alliance had tried to agree on further oil production cuts but Moscow refused.

US National Economic Council director Larry Kudlow remained optimistic that Mr Trump's mediation to push for talks between Russia and Saudi Arabia "will bear fruit", he told Bloomberg Television.

A revival of 'multilateral' oil politics was likely, noted Norbert Rücker, head of economics and next-generation research at Julius Baer. He expected a deal among producers or for the US to pressure Saudi Arabia and Russia to cut separately.

"The petro-nations and the United States have limited interest in watching their oil business fight brute market forces or in watching their petro-revenues running dry. Given Saudi Arabia’s dependence on US support, and given the US sanctions on Russia, there are some trump cards on the table of global oil politics," he said.

Updated: April 6, 2020 06:31 PM

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