Kuwait and Saudi Arabia could be days from agreeing the restart of oil production from the two fields they share in the so-called neutral zone.
Bloomberg quoted Kuwait’s Oil Minister, Khaled Al-Fadel, as saying during a news conference on Sunday that “We hope that by the end of the year things will be cleared out and things will go back to normal.”
The report is the latest in a series about Kuwait and Saudi Arabia trying to resume production from the neutral zone despite the latest extension and deepening of the OPEC+ oil production cuts.
Two fields in the partitioned zone—Khafji and Wafra—pumped half a million barrels daily until 2015. Operational differences and a worsening in bilateral relations led to the suspension of production during that year. The worsening came as Saudi Arabia renewed Chevron’s concession for Wafra. According to the Kuwaiti side, Riyadh did that without consulting it.
Last year, there was talk about restarting joint production after the United States called on its Gulf allies to increase production to keep rising oil prices from going too high. In September 2018 the Financial Times reported that the two countries were mulling over a restart amid rising oil prices and the matching rise in worry among large oil buyers.
This year reports emerged that negotiations had restarted, with media outlets quoting Saudi Arabia’s then-oil minister Khalid al-Falih as saying he hoped all issued to be settled by the end of the year.
According to a source who spoke to Bloomberg, the resumption of oil production from Khafji and Wafra will not add to global supply because both Kuwait and Saudi Arabia comply with their production quota under the OPEC+ agreement. Even so, any news about the restart of the neutral zone fields would punish prices as all reports so far have.
By Irina Slav for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- The Best And Worst Oil Predictions Of 2019
- US Proved Oil & Gas Reserves Hit New Record High
- Have Oil Prices Reached An Inflection Point?
And even if the 500,000 barrels a day (b/d) production immediately joined the global oil supply, their impact will be hardly felt at a time when the global oil market is facing a glut which has been widened by the trade war to an estimated 4.0-5.0 million barrels a day (mbd).
Therefore, they will hardly impact oil prices.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
The OPEC ministers and members cannot hold a deal very long, they always seem to bite each other's asses.