Opec backs plan to keep lid on oil supplies as tension rises

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South Africa Headlines News

Oil producers support extending production cuts but Russia is not on board yet

Saudi Arabian energy minister Khalid al-Falih, and Opec secretary-general Mohammed Barkindo pose for a photo with employees after the conference of the 14th meeting of the joint ministerial monitoring committee in Jeddah, Saudi Arabia, May 19 2019. Picture: REUTERS/WALEED ALI

It was less clear, however, how far Russia, their main partner in the wider Opec+ producers’ coalition, shared that view. While most nations at a meeting on Sunday supported extending production cuts into the second half, Russian energy minister Alexander Novak said he wanted to wait and see what happens in the next month.

Saudi Arabia is trying to strike a balance between the need for higher crude prices to fund government spending and pleasing Trump by filling any supply gap created by his Iran sanctions.Continuing the Opec+ accord into the second half would not rule out a production increase. Saudi Arabia has been cutting far deeper than required under the deal and could boost output by about 500,000 barrels a day — equivalent to almost half Iran’s exports — without breaching its limit.

Russia’s Novak affirmed his commitment to the historic alliance, saying the production cuts have “proved very efficient”. That counts as high praise from the taciturn official, yet before and after the meeting he also spoke of the possibility of relaxing the cuts.“We need to promptly react to the situation now and potential developments in the second half,” Novak said before the meeting.

 

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