OPEC is notorious for arguing over production policies - but Prince Abdulaziz bin Salman has effectively managed to deliver his first output cut just four days after becoming the new Saudi energy minister, reports Trend referring to Reuters.
With an impending listing of state oil giant Saudi Aramco and rising Saudi budget needs, the issue of higher oil prices is looming large for Prince Abdulaziz.
But when he first met fellow Gulf oil ministers and OPEC officials this week, his first message wasn’t about oil prices.
Prince Abdulaziz said first and foremost he was keen to rebuild trust with oil neighbors Kuwait, the United Arab Emirates, Oman and other OPEC members, sources familiar with the meetings in Abu Dhabi said.
The prince, a veteran oil official and senior member of the Al Saud ruling family, is expected to deal with OPEC matters differently from his predecessor Khalid al-Falih, according to three sources, who were briefed on the discussions.
Falih has repeatedly upset other OPEC producers by forging deals with non-OPEC Russia first without discussing them with the kingdom’s Gulf OPEC allies, who traditionally cut or raised output together with Riyadh.
“The new minister likes decisions to be unanimous instead of being presented as just Saudi-Russian agreements,” one source told Reuters. “He wants us to be a united front.”
Within hours the strategy had paid out.
Iraq and Nigeria, two of OPEC’s members which were over-producing well above their OPEC targets, joined Prince Abdulaziz at the same news conference table after a joint committee meeting, known as the JMMC, to pledge swift production cuts.
As a result of their actions, OPEC’s output may drop further by around 400,000 bpd, or 0.4 percent of global supply, to help support oil prices at a time of rising fears of global economic recession and soaring U.S. production, two sources said.
“Acting in unity sends strong messages to the market and gives it greater confidence,” the prince said as he invited the Iraqi and Nigerian ministers to explain their next moves.
“My honorable colleague Minister Novak has wakened up to a new reality which is that we are not being too inclusive and we should have been,” said the Saudi minister, who was seated next to his Russian counterpart Alexander Novak.