Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Opec+ has unexpectedly postponed an important meeting on the future of its production curbs, as members of the oil cartel hold talks over compliance with existing quotas.
The group, led by Saudi Arabia and Russia, said the meeting of the joint ministerial monitoring committee would be pushed back from Sunday until December 5. It blamed the delay on a clash with a meeting of the Gulf Cooperation Council in Kuwait on Sunday. Five of the GCC’s seven members also belong to Opec+.
However, the announcement came a day after three-way talks on Wednesday between Saudi and Russian energy ministers and their counterpart in Kazakhstan. The central Asian country has consistently angered other members of the 22-country group by exceeding production targets designed to restrict global oil supply and push up prices.
The Saudi minister – Prince Abdulaziz bin Salman – and his Russian counterpart Alexander Novak on Tuesday visited Baghdad, capital of Iraq, another regular over-producer.
Amrita Sen, director of analysis company Energy Aspects, said compliance was expected to be a “key focus” of the ministerial meeting.
Jorge León, a former Opec staffer who is head of geopolitical analysis at energy consultancy Rystad, said there was “tension” over the position of Kazakhstan, which wants to increase its oil production following the development of the new Tengiz oilfield in the country.
Iraq and Kazakhstan earlier this year submitted plans to Opec to scale back their production in the second half of the year to compensate for having exceeded their agreed figures in the first half.
Kazakhstan is one of eight members of the group that since November last year have been following a policy of voluntary production cuts intended to shore up the oil price. The country has been demanding the right to have its production capacity reassessed to allow it to increase output.
A dispute over quotas last year prompted Angola, Africa’s second-biggest oil producer, to leave Opec.
León said Kazakhstan was pushing for a higher “baseline” — the basic production capacity figure for a country on which agreed cuts to actual production are measured.
“The problem . . . is that the moment that one country asks for a higher baseline, all of the countries will ask for a higher baseline,” he added. “I don’t think [Kazakhstan] will leave, but there might be a little bit of tension there.”
A Saudi press agency report of the trilateral meeting said the Kazakh minister had reaffirmed his country’s intention to stick to its agreed production figures.
The meeting in Baghdad produced similar assurances about Iraq’s readiness to stick to future production allowances.
At the rescheduled meeting, Opec+ members are widely expected to agree an extension of both the current cuts to production quotas and the additional voluntary cuts for at least several more months.
Brent, the international crude oil benchmark, was little changed on Thursday, up 0.4 per cent at $73.09 a barrel.
Read the full article here