Abu Dhabi, UAEWednesday 21 October 2020

CORONAVIRUS

UAE pledges 100% compliance with Opec+ cuts in September

Demand recovering amid lifting of lockdowns by many countries

The UAE's compliance with the Opec+ deal on production cuts reached 116% for the month of September, according to a Reuters data. Reuters
The UAE's compliance with the Opec+ deal on production cuts reached 116% for the month of September, according to a Reuters data. Reuters

The UAE pledged to comply fully with production cuts mandated by the Opec+ alliance for September and will compensate for earlier overproduction, the Energy Minister said.

Rising demand for electricity during the UAE’s peak summer months, with limited travel abroad, required higher amounts of fuel to meet domestic consumption.

"We are planning to have 100 per cent conformity in the month of September,” Suhail Al Mazrouei said after the alliance’s joint ministerial monitoring committee meeting on Thursday.

"And even though we are still importing some of the requirements from some of our neighbouring states through the GCC electricity line, we are committed for 100 per cent."

Mr Al Mazrouei said the country expected some peak demand during September but pledged to make compensatory cuts in October and November for overproduction in August.

The UAE voluntarily cut 100,000 barrels per day more than its quota between May and July to support the alliance’s attempts to reduce stocks.

The alliance responded to a record drop in global demand in April, caused by travel restrictions to battle the Covid-19 pandemic.

It cut a historic 9.7 million bpd between May and July, which helped to stabilise the markets.

With recovering demand and lockdowns easing in many nations, Opec+ decreased the cut to 7.7 million bpd from August.

The monitoring committee extended the period for compensatory cuts to December.

Producers including Mexico achieved 102 per cent compliance in August.

"This is vital for the ongoing rebalancing efforts and helping to deliver long-term oil market stability,” the group said after the meeting.

It was "willing to take further necessary measures when needed” and remained “pro-active and pre-emptive” to respond to a rising number of Covid-19 cases globally and their repercussions on demand.

Global coronavirus infections on Thursday exceeded 30 million, with 948,502 deaths reported.

The Saudi Energy Minister, Prince Abdulaziz bin Salman, had harsh words for non-compliance among producers, saying “full compliance is not an act of charity”.

Prince Abdulaziz also pledged to "never leave the market unattended”.

“I want the guys in the trading floors to be as jumpy as possible,” he said.

Brent, the international benchmark, was up 2.61 per cent trading at $43.32 per barrel at 11.27pm UAE time.

West Texas Intermediate, which tracks US crude grades, was up 2.19 per cent, trading at $41.04 per barrel.

Opec+ will convene next its joint technical and ministerial monitoring committees on October 15 and 19.

Updated: September 18, 2020 12:08 AM

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