Kuwait’s Oil Minister Khaled al-Fadhel emphasized that his country will back any decision made by OPEC and its allies on future oil supply policy as the body is expected to extend its production cuts into 2021 over lack of demand and subsequent low price for oil around the world.
“Kuwait fully supports the joint OPEC+ efforts to restore balance to the oil market, and going forward we will also support whatever necessary joint decisions will be agreed to under the OPEC+ framework.” the Kuwaiti Oil Minister remarked in a report revealed by national news agency KUNA.
While OPEC’s De-facto leader Saudi Arabia and non-OPEC oil giant Russia are in favor of extending existing oil production cuts of around 7.7 million barrels per day (BPD) into next year to support a favorable market price for oil, few of its members lead by Kuwait and the UAE are exploring options to increase their outputs by reassessing the targets.
Extending the existing production cuts would be a stark departure from the OPEC+ earlier pact with its members. The body had previously agreed to raise output by 2 million bpd in January.
As the body sets up to have its next meeting in November, debate about targets and how they are calculated would complicate policy discussions on balancing supply with weak demand.
Kuwait and the UAE, avid Saudi supporters on oil production policies see an extension as detrimental and unsustainable into the next given the investment they have recently made to boost outputs.
The UAE which has been supplying oil to international oil companies on its predefined contracts has been dependent on foreign oil companies to serve its clientele after reducing its production by 33 percent to bring down the production from around 3.9 million BPD to 2.59 million BPD.
The country pumped more than its target in August but pledged to compensate for the rise by reducing its oil supply in the coming months.
Kuwait meanwhile reduced its production by about 26 percent (2.297 million BPD) after boosting its overall capacity to around 3.1 million BPD.
OPEC’s second-largest producer Iraq which has been required to cut about 850,000 BPD, suggested that it will comply with any production cuts proposed by the body.
“Iraq will stay committed to OPEC+ cut deal and we will keep respecting our pledge, not only to cut production but also to compensate for the missing months until end year,” said a senior Iraqi oil official who attends OPEC meetings.
However, similar to the UAE and Kuwait, it has too made reservations about extending the production cuts deep into 2021 stating that “But, and here we have a big but, when OPEC will meet again to discuss 2021 plans it will be difficult for Iraq keep cutting output and exports with the same agreed share in 2020 because we are suffering a financial crisis which threatens the possible collapse of the Iraqi economy.