OPEC President Backs Potential Oil Output Cuts

The idea that OPEC+ could consider production cuts in the near future would be in line with OPEC’s view, the rotating president of OPEC, Congo’s Hydrocarbons Minister Bruno Jean-Richard Itoua, told The Wall Street Journal on Thursday. 

The idea of new OPEC+ cuts, just as the previous round of massive reductions is set to be fully rolled back by the end of this month, was aired earlier this week by Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman. The top Saudi oilman said that OPEC+ was ready to cut production at any time in any form if it believes it would bring stability to the “schizophrenic” oil market. 

“Markets can’t reflect the realities of the physical fundamentals in a meaningful way and can give a false sense of security at times when spare capacity is severely limited and the risk of severe disruptions remains high,” Prince Abdulaziz bin Salman said in a Bloomberg interview, as carried by the Saudi Press Agency. 

The Saudi minister said that the OPEC+ group would soon start working on a new agreement beyond 2022 and that it was “determined to make the new agreement more effective than before.” 

The comments from Prince Abdulaziz bin Salman pushed Brent oil prices back up to above $100 a barrel earlier this week. 

On Thursday, OPEC’s rotating president Itoua told the Journal that the Saudi idea of new production cuts was “in line with our views and objectives.” 

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OPEC’s president for this year added he could be in favor of cuts since “economic conditions created by the pandemic in recent years that have led to a slowdown in global economic activity have not yet been entirely stemmed.” 

There isn’t any formal proposal at OPEC+ asking the group to consider a new round of oil production cuts, five sources at the producer alliance told Argus on Wednesday. 

OPEC+ meets next on September 5 to discuss market conditions after it approved in early August a small 100,000-bpd increase in the alliance’s collective target for September.  

By Tsvetana Paraskova for Oilprice.com

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