MUSCAT: Ahead of Saturday’s crunch talks by Opec members and its allies on a further extension of global production curbs, the Sultanate of Oman has announced that it will back any decision that will help shore up international oil prices.
Non-Opec member Oman has already slashed around 200,000 barrels per day (bpd) of its crude output for May and June 2020 as part of a historic pact reached in April by Opec and its allies (together known as Opec+) to slash global production and end a damaging supply glut.
On Friday, a top official of Oman’s Ministry of Oil and Gas said the Sultanates will lend its weight to any move by global producers that will help reduce inventories and thereby boost oil prices.
“We are always supportive of any decision adopted by Opec and Opec+,” said Ali Abdullah al Riyami, Director General of Oil & Gas Marketing, who will be in attendance, along with Dr. Mohammed bin Hamed al Rumhy, Minister of Oil and Gas, at the virtual meeting scheduled at 6 pm (Oman time) on Saturday.
Speaking to the Observer, Al Riyami said the Opec+ meeting will primarily focus on a key issue: a further extension of the 9.7 million bpd output cut agreed by producers in April.
“The main subject on the agenda is the extension of the production cut, as well as the conformity of Opec+ producers (to agreed cuts) for the month of May. There are some countries pushing for an extension of one month (covering July), while there are others who think an extension for two months would be better. So the main issue is whether to agree to an extension of one month or two months or none at all.”
Last April, Opec’s 13 members joined hands 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.
Oman, for its part, agreed to shoulder a cut of 200,000 bpd for May and June 2020, followed by a reduction of 161,000 bpd from July to December 2020. This will be further pared to 121,000 bpd for the remainder of the accord from January 2021 to April 2022.
Significantly, conformity figures for Oman stand at an impressive 102 per cent for May, according to the official.
Asked about the beneficial impacts of even a brief extension in the production curbs, Al Riyami added: “Although the proposed extension is for one or two months, the broader objective is to reduce the overhang in crude volumes produced in the past that are currently in storage. The idea is to reduce these volumes in storage, which will automatically improve oil prices. This is basically the goal.”