OPEC+ (plus) solidarity is threatened into collapse (2/3)

 

(Japanese Version)

(Arabic Version)

Jan, 2021

 

2. Conflict and compromise between Russia and Saudi Arabia (cont’d)

Many of OPEC+ countries have been suffered from the shortage of revenues. Russia and Kazakhstan, both non-OPEC oil-producing countries, were the most radical ones. They insisted to ease production cuts. Saudi Arabia, in return, forced OPEC member countries to keep the existing scheme. However, other OPEC members except Saudi Arabia want to increase production to makeup the deficit. Several countries didn’t adhere to the production quota. They objected against Saudi Arabia. OPEC was jeopardized.

 

Saudi Arabia can hardly act as a major player in the international arena. Saudi Arabia can only maintain its reputation as long as she is the leader of OPEC. Therefore, Saudi Arabia cannot breach the unity of OPEC and OPEC+. Saudi Arabia managed to avoid the collapse of OPEC+ proposing to held ONOMM meeting and review the progress every month after January, 2021. In December, 2020, ONOMM decided to ease the production from January, 2021 by 500,000 B/D to 7.2 million B/D[1].

 

At the 13th ONOMM held on January 5, 2021, the voluntary production levels from January till March were shown by country[2]. The production levels of Saudi Arabia and Russia in January are the same as 9.119 million B/D. Other major countries are as follows; Iraq 3.857 million B/D, UAE 2.626 million B/D, Kuwait 2.329 million B/D, Mexico 1.753 million B/D, Nigeria 1.516 million B/D, Kazakhstan 1.417 million B/D. But February and March production levels shows that only two countries, Russia and Kazakhstan, approved the further mitigation. The production levels of other 10 OPEC countries and the eight non-OPEC countries have not changed. (cf. Iran, Libya and Venezuela are excluded from voluntary production accord.) Only Russia and Kazakhstan enjoyed the preferential treatment. This was the clear evidence of the dispute and compromise between Saudi Arabia and Russia.

 

It was the great surprise that after the ONOMM meeting, Saudi Arabia's oil minister, Abdulaziz bin Salman, announced that his country would voluntarily cut production by an additional 1 million B/D in February and March[3]. Saudi Arabia's generous decision tightened global oil supply and demand. Price of Brent oil has boosted to $ 55 per barrel.

 

(cont’d)

 

By Areha Kazuya

E-mail: Arehakazuya1@gmail.com

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[1] OPEC Press Release

https://www.opec.org/opec_web/en/press_room/6257.htm

[2] https://www.opec.org/opec_web/static_files_project/media/downloads/Voluntary%20Production%20Levels.pdf

[3] Saudi Arabia to cut oil output ‘as gesture of goodwill’ to markets

2021/1/5 Arab News

https://www.arabnews.com/node/1787766/business-economy