Saudi Energy Minister Prince Abdulaziz bin Salman’s warning on 17 September to market speculators betting against the OPEC+ alliance to “make my day” did just that, as Brent oil prices posted their largest 3-day advance since May.
Bin Salman’s warning followed his announcement pressing OPEC+ compliance laggards to adhere to their production quotas by the end of December. The prince said he would try to make the market “jumpy” and promised those who gamble on the oil price would be “ouching like hell,” reported Reuters from a news conference. He made his remarks with UAE Energy Minister Suhail al-Mazrouei seated next to him in Riyadh, while other ministers attended the meeting via videoconference.
Bin Salman’s comments came after a virtual meeting of a key panel of OPEC+ known as the Joint Ministerial Monitoring Committee (JMMC). He said he had secured commitments by all OPEC+ members to make good on their pledged crude production cuts by year end.
Under the agreement, any countries that overproduce their quotas must make extra "compensation cuts" of an equivalent volume in subsequent months. Countries that exceeded their quotas from May through August have a cumulative 2.375 million B/D of compensation cuts due, according to the committee's analysis.
The panel did not recommend any changes to their current output reduction target of 7.7 million B/D, or around 8% of global demand.
In August, the OPEC+ coalition rolled back its historic 9.7 million B/D production cut accord to 7.7 million B/D and is scheduled to relax it further to 5.8 million B/D at the start of 2021.
The cuts, implemented in May, are credited with helping to revive the market following the coronavirus shock of the spring, when Brent prices collapsed. But since June, the rally has stalled at between $40 and $45 per barrel, and the increasing of global coronavirus cases have led several forecasters to project far less global oil demand growth than previously expected.
The group warned that rising COVID-19 cases in some countries could curb energy demand despite initial indications of a decline in oil stocks, and bin Salman told the gathering OPEC+ could hold an extraordinary meeting in October if the oil market soured because of weak demand and rising coronavirus cases, according to an OPEC+ source. He said OPEC+ would take a proactive and preemptive stance in addressing oil market challenges.
"We will never leave this market unattended," the prince told reporters after the JMMC meeting, which he co-chaired with Russian counterpart Alexander Novak.
"Our aim is to keep track of the market and as demand recovers to slowly increase supply as to not overheat the market," Novak said.
The nine-country JMMC is tasked with monitoring market conditions, tracking member compliance, and recommending any changes to the OPEC+ deal, if needed. It is next due to meet online on19 October, with the full 23-country OPEC+ coalition scheduled to meet 30 November–1 December in Vienna.