同日稍早，据媒体报道，沙特石油部长最新表示，如果OPEC+成员国不遵守商定的产量限制协议，油价可能会跌至每桶50美元：Saudi Arabia named Iraq and Kazakhstan, these two countries have not fulfilled the production cut agreement. According to some delegates, the message from Saudi Arabia is that if there is no room in the market, increasing production is meaningless, and some people are better off stopping. Other oil-producing countries interpret Saudi Arabia's latest statement as a tacit threat, that if other countries do not adhere to the production cut agreement, Saudi Arabia is willing to launch a price war to protect its market share.
On Wednesday, the main members of OPEC+ held an online meeting to discuss whether to relax production limits. After the meeting, the organization issued a statement stating that the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting had concluded, emphasizing the importance of achieving full compliance and production compensations. OPEC+ did not make any changes to its production policy and will maintain the plan to increase production starting in December. The next JMMC meeting will be held on December 1st.
Russian Deputy Prime Minister Novak stated that OPEC+ still adheres to the previously reached production capacity decisions. OPEC+ will continue to closely monitor changes in market conditions.
Earlier on the same day, according to media reports, the Saudi Oil Minister stated that if OPEC+ member countries do not adhere to the agreed production limits agreement, oil prices could fall to $50 per barrel:
According to an OPEC representative participating in a conference call, during last week's conference call, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman warned that if other oil-producing countries do not comply with the agreed production cut agreement, oil prices could fall to $50 per barrel.
Saudi Arabia specifically mentioned Iraq and Kazakhstan. According to S&P Global data, Iraq's daily production exceeded 0.4 million barrels in August. Kazakhstan's production will increase with the recovery of the Tengiz oil field, capable of producing 0.72 million barrels per day. In fact, besides Iraq and Kazakhstan, Russia's production until July this year has also exceeded quotas.
A delegate at the meeting stated that the message conveyed by Saudi Arabia is that it is meaningless to increase oil production if there is no space in the market. Some would be better off stopping and respecting their commitments to OPEC+.
Other oil-producing countries interpret Saudi Arabia's latest statement as an implicit threat, indicating that if other countries do not comply with the organization's production cut agreement, Saudi Arabia is willing to launch a price war to protect its market share.
Saudi Arabia's Ministry of Petroleum did not respond to requests for comments.
It is widely believed in the industry that Saudi Arabia needs an oil price of $85 per barrel to assist in its economic transformation.
Looking back at history, Saudi Arabia has once started an oil price war to punish other oil-producing countries. For example:
In March 2020, Saudi Arabia engaged in an oil price war with Russia. Saudi Arabia decided to increase oil production to record levels during the COVID-19 pandemic, leading to a 65% drop in oil prices for the quarter, to the lowest level in 17 years. Some oil prices even experienced negative growth for the first time in history.
Oil prices fell below $10 per barrel in 1986, also due to Saudi Arabia increasing production.
On Tuesday, Iran launched hundreds of missiles at Israel. Against the backdrop of escalating tensions in the Middle East, oil prices experienced a long-awaited sharp rebound after a prolonged slump. Daily oil prices rose by 5% at one point, eventually closing with a narrower increase of 2.4%.
Some industry insiders are concerned that an escalation of Middle East conflicts could obstruct oil exports from the Gulf region through the Strait of Hormuz, bordered by Iran, thereby pushing up oil prices. However, to date, geopolitical tensions have persisted for several months without having a substantial impact on oil prices. Market concerns about slowing economic growth outweigh the disruptions brought by geopolitics.
In recent months, oil prices have been on a downward trend. As of the end of September, WTI and Brent crude oil prices have fallen for three consecutive months, with drops of 6.2% and 6.7% in September, respectively, resulting in a decline of about 16% for the third quarter.
Facing weak oil prices, OPEC+ has extended production cuts multiple times. Following an online meeting held by OPEC+ member countries last month, it was decided to delay the production increase by two months until December. The organization initially agreed in June to gradually ease voluntary production cuts starting from October.
Despite OPEC+'s efforts to stabilize the market through production cuts, oil prices continue to decline relentlessly. This has left the Saudi authorities frustrated. The slump in oil prices is partly due to some OPEC+ member countries ignoring the production limit plan for most of this year, making the production cut plan less effective.
OPEC+'s production cuts mean a shrinking share in the oil market. Data from the International Energy Agency shows that its share is 48% this year, lower than 50% in 2023 and 51% in 2022, with competition expected to intensify further next year.
Meanwhile, other oil-producing countries like the USA, Guyana, and Brazil are increasing production, expected to add over 100 million barrels per day to global oil supply. Brazil joined OPEC+ this year but has stated it will not participate in production cuts.
Editor/Lambor
