Oman joins Opec+ in historic pact to shore up oil prices

Non-Opec producer Oman has pledged to cut 200,000 barrels per day (bpd) of its crude output for May and June 2020 as part of an historic pact reached on Sunday night by Opec and its allies (together known as Opec+) to slash global production in a bid to shore up international oil prices battered by the coronavirus pandemic and a bruising oil price war waged by Saudi Arabia and Russia.

According to a high-level official of Oman’s Ministry of Oil and Gas, the Sultanate’s share of the cuts will decline to 161,000 bpd for the rest of this year, before falling to 121,000 bpd for the remainder of the agreed timeframe of the pact, which runs till April 2022.

“During (Sunday’s) meeting, Oman had agreed together with other producing countries to participate in the Opec+ cuts,” said Ali Abdullah al Riyami, Director General of Oil & Gas Marketing. “Oman’s contribution for the first two months, viz May and June 2020, is 200,000 barrels, and from July onwards to December 2020, it will be 161,000 barrels. From January 2021 to April 2022, it will be 121,000 barrels.”

The groundbreaking deal came late on Sunday night with Opec’s 13 members joining forces with 10 non-member producers including Russia, to cut output by 9.7 million bpd during May – June 2020.  The cuts will be further eased to 7.7 million bpd between July and December 2020, and then to 5.8 million bpd between January 2021 and April 2022.

Speaking to the Observer, Al Riyami – who participated in the latest round of Opec+ talks alongside Dr Mohammed bin Hamad al Rumhy, Minister of Oil and Gas – said the baseline for Oman’s production cuts will be October 2018.

“Our reference production for October 2018 was 883,000 bpd of crude, which was determined by secondary sources appointed by Opec, and not by us. Also starting from December 2019, the condensate production is not part of the cuts, which means that the production cuts will come from crude oil output alone.”