OPEC+ may hold extraordinary October meeting if oil market worsens

Daniel Fowler
September 20, 2020

Saudi Arabia's energy minister said Thursday the U.A.E. has shown its commitment to the cuts and issued a stark warning to oil speculators not to bet against OPEC+.

El Aissami recognized the efforts of Saudi Arabia and Russian Federation as presidency and co-presidency of OPEC Plus, and of Algeria as head of the OPEC Conference, for promoting high-level dialogue among oil-producing countries to shore up fuel prices.

But the cartel has called out laggards, including Nigeria and Iraq, for over-producing and failing to implement their share of the cuts.

After falling early in the session amid bearish jobs numbers and a ramp up in Gulf of Mexico oil output following Hurricane Sally, crude benchmarks reversed course to gain on the day, bolstered by comments from OPEC.

"Tactics to over-produce and hide non-compliance have been tried many times in the past, and always end in failure", said the minister.

"Anyone who thinks they will get a word from me on what we will do next, is absolutely living in a La La Land".

This week, OPEC and the International Energy Agency (IEA) revised down for the second consecutive month their respective demand forecasts for 2020, amid heightened uncertainty over the pandemic and the economic recovery.

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Saudi Energy minister Prince Abdulaziz bin Salman speaks after a news conference in Jeddah, Saudi Arabia September 17, 2019.

The OPEC + Ministerial Monitoring Committee (JMMC) has recommended that countries involved in the oil limitation deal should be prepared to take further measures to stabilize the market if necessary.

The technical panel also said it was concerned about the rise in the cumulative overproduction, which has reached 2.38 million bpd from May until August, according to the report.

In its monthly report, the organisation said it expected world oil demand to fall by 9.46 million barrels per day (bpd) this year, more than the 9.06 million bpd decline expected a month ago.

The cuts were then to be gradually eased from July, to 7.7 million bpd until December.

Citing statistics, on the day's commodity market closure, the United Kingdom crude futures' prices had extended their ongoing rally by 2.56 per cent to $43.30 per barrel, while USA crude futures had winded down the day 2.02 per cent higher to $40.97 a barrel.

Under the agreement, any countries that overproduce their quotas must make extra "compensation cuts" of an equivalent volume in subsequent months. We hope that we have succeeded by giving you the full details and information.

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