Saudis No Longer Willing To Compensate For OPEC+ Cheaters | OilPrice.com

OPEC’s largest producer and de facto leader Saudi Arabia will likely tell fellow producers in the OPEC+ pact next week that the Kingdom would no longer tolerate and compensate for cheating on assigned production quotas, Bloomberg reported on Friday, citing people with knowledge of the current Saudi position.

While other members in the cartel, notably Iraq and Nigeria, have repeatedly exceeded their respective production caps by more than 100,000 bpd, Saudi Arabia has not only stuck with its share of the cuts, but has also overcomplied by more than 400,000 bpd—bringing the total reduction of the Kingdom at more than 700,000 bpd in recent months.

At his first full OPEC summit as Saudi Energy Minister, Prince Abdulaziz bin Salman is expected to take a harder line on non-compliant producers than his predecessor Khalid al-Falih, whose “whatever it takes” to balance the market meant that the Saudis were inclined, for some time, to compensate for rogue OPEC members.

Saudi Arabia is reportedly pressuring non-compliant cartel members to fall in line with their share of the cuts, instead of pushing aggressively next week for a deeper overall cut to rebalance the market. Deeper cuts would mean the Saudis would have to take the lion’s share of cuts, again.

Yet, the tougher stance on non-compliant producers could further complicate the OPEC+ talks next week, because OPEC and Saudi Arabia’s key ally in the pact, Russia, has also had a sketchy compliance record this year. Related: The Natural Gas Nation Every Exporter Is Targeting

Russia has been slow to comply with its share of cuts, pumping slightly above its quota in recent months, and missing its production target in October yet again, despite promises that it would fall in line.

Russia’s non-compliance extending into November could further complicate talks next week. The Saudis are going the extra mile by cutting 400,000 bpd more than they are expected to, but it has been thanks to Russia that the pact has held for three years now.

The Russians have a grievance about the pact that they are likely to take up with their OPEC allies. Russia could discuss with its OPEC partners the exclusion of gas condensate from its cap, as condensate isn’t exported, while it is included in Russia’s oil production statistics, Energy Minister Alexander Novak said last week. This week, the minister added that Moscow hasn’t asked the OPEC+ group for this yet. Russia tries to keep in line with its quota, but increased gas condensate output prevents it from doing so, Novak said on Thursday.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

This post was originally posted on OilPrice.com Daily News Update – View Original Article

Please follow and like us:
error

About the Author

admin
Have lived and invested in Venezuela full time for the last eight years and visited for each of twelve years prior to that. Studied and closely followed developments in Venezuela since 1996.