x Abu Dhabi, UAE Thursday 20 July 2017

Opec president urges members to cut

Opec members have no choice but to implement agreed output cuts and inform customers of the reductions.

ALGIERS // Opec members have no choice but to implement agreed output cuts and inform customers of the reductions if they want a stable oil price between $70-$90 a barrel, the Opec president Chakib Khelil said on Sunday. Mr Khelil, who is also Algerian Energy and Mines Minister, told Algerian state radio that Saudi Arabia was key to the success of the reductions, and if the world's biggest oil exporter took its time over the operation the oil price could be affected.

"I think that's what the market is waiting for now - to see that there really is a reduction in the market and not take at face value the declarations of the different deciders about a cut, or another cut, or about their intentions - it's what is seen on the market that will affect prices," he said. "Everything depends on the impact on the decision of Saudi Arabia...Therefore if it slows the cut, or does not do it, then of course there will be an impact on the oil price."

Opec decided at a meeting in Vienna last month to chop production by 1.5 million barrels per day or about five per cent from Nov. 1 to halt a more than 50 per cent slide in prices. Traders are now looking for evidence that they are making good on that promise. A key signal would be Gulf suppliers sending word to Asian refiners that volumes will be reduced.

Khelil said: "Until now, Saudi Arabia has not yet informed its clients of the cut of 5 percent that we have agreed, while all the other members have done this, and I myself have written to the members to inform them that this should be done because this is the only means for the market to see that we are really serious about the Vienna decision." Saudi Arabia normally informs its customers how much crude it will sell them by the middle of the preceding month. The kingdom has been supplying Asian refiners with their full contracted volume since late last year.

Khelil said he believed all Opec members were satisfied by new, lower volumes assigned to them under Opec agreements. "We will not review the policy of quotas because everyone is satisfied with the quotas," he said. "Members have no other choice if they want stable prices between $70 and $90. They have no other choice but to carry out the reduction of their output." *Reuters