Abu Dhabi, UAESaturday 19 October 2019

Saudi Arabia's new energy minister brings old school diplomacy to Opec

Prince Abdulaziz bin Salman sought to assure members that Saudi Arabia and Russia aren't the only parties to their deal

Prince Abdulaziz bin Salman, Saudi Arabia's new energy minister brought Iraq and Nigeria to the table to deliver cuts from October. Pawan Singh / The National
Prince Abdulaziz bin Salman, Saudi Arabia's new energy minister brought Iraq and Nigeria to the table to deliver cuts from October. Pawan Singh / The National

At the conclusion of Opec's joint ministerial monitoring session on Thursday, Iraq and Nigeria — two producers notorious for not complying with a pact to cut production — flanked Saudi Arabia's new energy minister at a joint press conference.

It was a marked departure from previous JMMCs (joint ministerial monitoring committee meetings) when his predecessor Khalid Al Falih, along with Russia, would address the concerns of the market directly.

Instead, Prince Abdulaziz bin Salman Al Saud, a half-brother of Crown Prince Mohammed bin Salman, took a light-hearted approach, seeking to include the violators of the deal to come together to meet collective compliance.

Calling himself a "kitchen man and a basement man", the Prince, the first royal to head the country's energy sector, looked to bring his self-deprecating sense of humour to the proceedings calling himself at one point "a new and improved shampoo" and said he was "vintage", referring to his nearly three-decade-long presence at Opec.

His charm and adeptness at diplomacy worked. Following his remarks, he urged the Iraqi oil minister, Thamir Ghadhban as well as the new Nigerian minister Timipre Silva to pledge their compliance with the pact.

Both states, which had lost production to conflict and only loosely complied with the pact so far, had chosen instead to boost output to keep their oil revenue-depending economies running.

Iraq's Ghadhban was the first to vocalise commitment to compliance, pledging to restrain export and production levels in October, saying the country had already begun cutting back output.

Nigeria's Silva, meanwhile, admitted there had been "non-compliance" but said the country would cut output from October as well.

The approach was very different to Khalid Al Falih, an ex-Saudi Aramco chief executive who led the group through a difficult patch after oil crashed to below $30 in 2016, forming alliances with non-members, particularly Russia, as they worked together to counter the US shale dominance of the industry.

Mr Al Falih would talk to the markets, taking an almost central bank governor approach, using terms such as "whatever it takes" to address issues critical to the industry.

According to Sara Vakhshouri, of SVB Energy, Prince Abdulaziz takes Opec back to a more consensual decision-making process, rather than having Saudi Arabia or Russia unilaterally taking policy decisions for members.

Other analysts, however, remained worried the Prince's softer tone may not be enough to bolster oil markets that remain lukewarm due to a combination of a global slowdown and trade war-related woes.

"He doesn't talk up prices like Al Falih did," said the analyst.

Oil finished the week on a negative note following the meeting, with Brent finishing at $60.22 per barrel on Friday.

Updated: September 14, 2019 07:20 PM

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