Saudi oil minister: Market too fluid for policy advice

The oil market is too fluid to allow for any decisions on Opec+ policy beyond the end of this year to be made now, Saudi Arabia's oil minister Prince Abdulaziz bin Salman said today.

Speaking on semi-official Asharq TV after a meeting of the Opec+ Joint Ministerial Monitoring Committee (JMMC) that ended without an immediate policy recommendation about how the group should proceed with its crude output cuts, Prince Abdulaziz said: "We are in a situation in which things are changing from day to day.

"Taking a position on the market, is from the professional perspective, not the right thing to do," he said, noting encouraging signs of economic growth in Asia-Pacific, particularly in China and India, while Europe and the US face various degrees of lockdown. But he again hinted at the possibility of extending the agreement's current phase.

"There is scope for taking additional measures, and I mentioned this in Abu Dhabi [at the Adipec conference] and repeated it today," he said.

The Opec+ coalition — grouping Opec's 13 members with 10 non-Opec producers — is to raise its combined crude output by around 2mn b/d from January as it enters the third and final stage of its pact. This would taper the collective output cut to 5.76mn b/d, from 7.68mn b/d, until April 2022.

The JMMC today considered a number of supply and demand scenarios for the coming year, including ones that envisage Opec+ extending its current output cuts by three months and by six months.

The base case scenario — which involves Opec+ sticking to its plan — sees commercial oil stocks declining by the end of next year, but only to a level more than 125mn bl above the five-year average. A scenario in which the cuts are kept at current levels for the first three months of 2021 sees stocks move down to 73mn bl above that average by the same time. A scenario in which cuts are extended for six months leaves inventories 21mn bl above the five-year average by the end of 2021.

Recommendations from the JMMC will be provided to Opec+ ministers at their upcoming meeting on 1 December, according to an Opec statement.

Referring to compliance with the agreement, which has been in sharper focus this year, Prince Abdulaziz said that some unnamed members had not made the additional compensatory cuts they had pledged in order to offset exceeding their quotas earlier. He said that they had "expressed their willingness to compensate."

Asked if Saudi Arabia would again make voluntary cuts beyond those called for by the output agreement, in order to compensate for over-production by others, he said: "That habit has been discontinued for good."

By Samira Kawar and Nader Itayim