Saudi slams oil producers over excess production as UAE, others flout supply curb agreement

Saudi Arabia has slammed oil producing countries for not fulfilling their share of supply cuts, saying the failure to fulfil individual supply curb quotas was "damaging" to the industry.

Energy Minister Prince Abdulaziz bin Salman made the remarks on Thursday during a virtual meeting of oil officials from several countries.

“Using tactics to overproduce and hide non-compliance have been tried many times in the past, and always end in failure. They achieve nothing and bring harm to our reputation and credibility,” Prince Abdulaziz said. “False promises not only discredit those who make them, but also weaken our collective goal . . . being transparent with the market and with this group about production and compliance always pay off.”

The minister and brother of Saudi Arabia's crown prince added that he will monitor the supply cuts agreed in April.

While he did not namy any country by name, sources cited by the Financial Times said the prince has been irked by the United Arab Emirates' continued production of hundreds of thousands of barrels in excess of its quota.

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According to The International Energy Agency, the UAE in July produced 420,000 more bpd than its quota of 2.45 million bpd. Last month, the UAE again exceeded its quota by 520,000 bpd, despite having its limit increased to 2.59 million bpd.

Prince Abdulaziz delivered his rebuke while sat next to the his Emirati counterpart, Suhail Al Mazrouei.

“Any actions or statements that cast doubts about our commitment and resolve send the wrong signal and undermine the stability of the market,” Prince Abdulaziz said. 

Riyadh, along with Russia and other members of the OPEC+ group of oil producing countries agreed to cut production by 9.7 million barrels per day in April. The production curb was later eased to 7.7 million bpd.

Following the measures, oil prices recovered from below $20 per barrel in April, but prices have recently failed to break beyond $40 per barrel.

The slump in prices has hit Saudi Arabia significantly, with state oil firm Saudi Aramco posting a net profit of $6.6 billion for the three months to 30 June, compared to $24.7 billion in the same period of 2019.

Riyadh is pushing for countries that have flouted the April agreement to compensate with new supply curbs.

“Repeated promises that are not carried through in a timely fashion may have temporary positive impact, but if these are not delivered, they can come back to bite us all. The market can’t be fooled continually,” Prince Abdulaziz said.

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