Energy ministers from the Gulf are committed to comply with supply cuts to balance oil markets as they see 'encouraging' signs of improvement in the the global economy.
Ministers from the UAE, Saudi Arabia, Kuwait, Bahrain, Oman and Iraq in a call on Friday discussed global oil demand recovery. They also reviewed the progress the Opec+ group of oil producing nations, led by Saudi Arabia and Russia, has made so far in implementing production cuts, the UAE's state news agency Wam said in a statement.
"Full compliance to the Opec+ deal, including making up for the limited progress on adherence, would speed up the recovery of the global oil market to the best interest of oil consumers and producers alike, the energy industry and the world economy," the statement said.
Efforts across the globe to reopen economies in "a safe manner" were also discussed during the call. The Gulf energy ministers said they are commitment to supply cuts "to further speed up the oil market's rebalancing".
Opec+, which is led by Saudi Arabia and Russia, began easing an historic pact to slash production earlier this month as global demand for crude picked up. The alliance is now cutting back 7.7 million barrels per day of output. Iraq, as well as Nigeria, Kazakhstan and Angola, failed to fully comply with the earlier pact by the group to cut 9.7m bpd from the market. The curbs, which were introduced from May until July have helped in stabilising energy markets that suffered record crunch in demand and prices.
On Friday, Iraq pledged to cut 400,000 barrels per day of output to make up for its lack of compliance with an Opec+ pact to reduce production.
Iraq's oil minister Ihsan Abdul Jabbar said Opec’s second largest producer will commit to the cut in production, in addition to the 850,000 bpd it is due to make in August and September.
"The reduction could be adjusted when the six secondary sources publish their production figures," a joint statement by the Iraqi and Saudi energy ministries on Friday said. The secondary sources refer to data from the energy industry provided by organisations such as the International Energy Agency.
Additional cuts would bring the total volume of Iraq’s output reduction to 1.25 million bpd.
Oil prices, which rose to five-month high last week, gave up some of their gains on Friday as tensions between the US and China. US President Donald Trump issued an executive order banning companies and individuals from engaging in business with Chinese parent companies of WeChat and TikTok.
Brent, the international benchmark for more than half of the world’s crude, was down 1.53 per cent at $44.40 per barrel at the close of trade on Friday. West Texas Intermediate, the key gauge for US crude was down 1.74 per cent at $41.22 per barrel.
Crude prices rose last week after a larger-than-expected crude inventory draw in the US. The explosion of an ammonium nitrate cache in Lebanon on Tuesday, which left 157 dead, briefly also helped the rally.