Saudi Arabia dismisses reports of break with Opec+ pact
Prince Abdulaziz, the kingdom's energy minister, says collective action is top priority
Saudi Arabia is not looking to break with a global pact to restrict production in order to go its own way to deepen cuts to counter the impact of the coronavirus, according to the country's energy minister.
The kingdom, the world's largest exporter of crude, would continue to act in continuous dialogue with its partners who include non-members led by Russia, said Prince Abdulaziz bin Salman who called rumours of a move to opt out of the pact "absurd and utter nonsense".
His comments to Reuters followed a report in the Wall Street Journal, which suggested that Saudi Arabia, which has been calling for quicker, stronger action in the oil markets to counter the slide in oil prices following the virus outbreak.
The report suggested Saudi Arabia, Kuwait, and the UAE were in discussions to cut crude output by 300,000 bpd collectively should Russia be unwilling to participate in the deepening of cuts. An Opec+ technical committee recommended keeping the current pact, which rolls back 1.7 million bpd from the markets until end of this year with a short term deepening of cuts by 600,000 bpd until the second quarter. While Gulf Arab states have shown their backing for the cuts, Russia's energy minister Alexander Novak remained sceptical of the impact of the virus in curbing oil demand growth and said the country needed more time to assess the full impact. Moscow also didn't agree to an emergency meeting of Opec+, choosing to wait until the planned meeting in Vienna that is scheduled for March 5 and 6 to review the pact.
Both Opec, as well as the Paris-headquartered International Energy Agency, have slashed demand growth forecast for this year after the epidemic crimped demand in China - the world's largest oil importer. Supply lines and transportation in China have been severely disrupted and oil prices have fallen by nearly $10 since the outbreak gathered momentum in late January.
The IEA warned of the biggest contraction in growth for the first quarter in a decade, with demand expected to fall by 435,000 bpd year-on-year.
Opec also revised down its demand forecast for oil by 440,000 bpd for the first quarter as it factored in the impact on the oil markets from the widespread disruption to global supply chains from the spread of the coronavirus.
Brent settled at $58.50 per barrel on Friday, while West Texas Intermediate closed at $53.38.
Updated: February 23, 2020 07:54 PM