DUBAI:  OPEC+ — the oil alliance led by Saudi Arabia and Russia — is aiming for full compliance with agreed output cuts in an attempt to re-balance global crude markets.

The 23-strong organization’s Joint Ministerial Monitoring Committee (JMMC) met by webinar under co-chairmanship of Prince Abdulaziz Bin Salman, the Kingdom’s energy minister, and agreed that “the attainment of 100 percent conformity from all participating countries is not only fair and equitable, but vital for the ongoing and timely rebalancing efforts, and helping deliver sustainability oil market sustainability.”

The meeting disclosed that compliance levels had averaged 87 percent in May — a very high level by previous standards — and that those countries that had failed to meet their commitments would make up for the shortfall between July and September.

Failure to meet agreed compliance levels has thrown out OPEC+ calculations in the past. Saudi Arabia holds the view that a rigorous adherence to agreed output reduction commitments is the key to future oil market stability.

The issue has become all the more important in face of the downturn in global demand as a result of the economic effects of the pandemic lockdowns. If oil producers “cheat” on their output levels it will add to the surpluses on global markets.

OPEC+ has taken approximately 9.6 million barrels per day out of the market since April, and Saudi Arabia and the Gulf allies have made voluntary cuts of a further 1.2 million barrels, due to expire at the end of the month.

Those countries that failed to meet the May target have agreed to make up for those shortfalls between July and September, in addition to their existing cut commitments. Iraq and Kazakhstan have submitted formal schedules to compensate for their shortfalls. 

Some members of OPEC+ want to extend the current level of cuts beyond the end of this month, when they are scheduled to be replaced by lower targets.

Russia, which was represented at the webinar by its energy minister, Alexander Novak, is believed to be less convinced of the need to prolong the current historic cuts levels.

Separately, Saudi Aramco said yesterday that it would meet its dividend obligation of $18.75 billion this quarter from a mixture of cash and debt.

“We would like to use our free cash definitely most of the time, but other debt instruments from banks, or bonds, are also available for us as we have a strong balance sheet,” Amin Nasser, Aramco’s chief executive officer, told journalists.

Reuters