OPEC+ members endorse output cut after U.S. coercion accusation

[October 17, 2022]  By Maha El Dahan, Yasmin Hussein and Moataz Mohamed

CAIRO (Reuters) -OPEC+ member states lined up on Sunday to endorse the steep cut to its output target agreed this month after the White House, stepping up a war of words with Saudi Arabia, accused Riyadh of coercing some other nations into supporting the move.

The United States last week said the cut would boost Russia's foreign earnings and suggested it had been engineered for political reasons by Saudi Arabia, which on Sunday denied it was supporting Moscow in its invasion of Ukraine.

Saudi King Salman bin Abdulaziz said the kingdom was working hard to support stability and balance in oil markets, including establishing and maintaining agreement of the OPEC+ alliance that comprises the Organization of the Petroleum Exporting Countries (OPEC) and other major producers including Russia.

The kingdom's defence minister and King Salman's son, Prince Khalid bin Salman, also said the Oct. 5 decision to reduce output by 2 million barrels per day (bpd) - taken despite oil markets being tight - was unanimous and based on economic factors.
 

His comments were backed by ministers of several OPEC+ member states including the United Arab Emirates.

The Gulf state's energy minister, Suhail al-Mazrouei, wrote on Twitter: "I would like to clarify that the latest OPEC+ decision, which was unanimously approved, was a pure technical decision, with NO political intentions whatsoever."

His comment followed a statement from Iraq's state oil marketer SOMO.

"There is complete consensus among OPEC+ countries that the best approach in dealing with the oil market conditions during the current period of uncertainty and lack of clarity is a pre-emptive approach that supports market stability and provides the guidance needed for the future," a SOMO statement said.

Kuwait Petroleum Corporation Chief Executive Nawaf Saud al-Sabah also welcomed the decision by OPEC+ and said the country was keen to maintain a balanced oil markets, state news agency KUNA reported.

Oman and Bahrain said in separate statements that OPEC had agreed unanimously on the reduction.

An OPEC flag is seen on the day of OPEC+ meeting in Vienna in Vienna, Austria October 5, 2022. REUTERS/Lisa Leutner/File Photo

Algerian energy minister Mohamed Arkab, meanwhile, called the decision "historic" and said that he and OPEC Secretary General Haitham Al Ghais expressed full confidence in it, Algeria's Ennahar TV reported.

Ghais later told a news conference that the organisation targeted a balance between supply and demand rather than a specific price.

In a statement to Reuters on Monday, Arkab said the OPEC+ decision, was "a purely technical response based on purely economic considerations", adding that it was adopted unanimously.

Oil inventories in major economies are lower than when OPEC has cut output in the past.

Some analysts have said that recent volatility in crude markets could be remedied by a cut that would help to attract investors to an underperforming market.

U.S. National Security Council spokesman John Kirby on Thursday said that "more than one" OPEC member had felt coerced by Saudi Arabia into the vote, adding that the cut would also increase Russia's revenue and blunt the effectiveness of sanctions imposed over its February invasion of Ukraine.

King Salman said in an address to the kingdom's advisory Shura Council that the country was a mediator of peace and highlighted the crown prince's initiative to release prisoners of war from Russia last month, state news agency SPA reported.

Khalid bin Salman on Sunday said he was "astonished" by claims his country was "standing with Russia in its war with Ukraine".

"It is telling that these false accusations did not come from the Ukrainian government," he wrote on Twitter.

(Reporting by Moataz Mohamed, Yasmin Hussien, Maha El Dahan and Aziz El YaakoubiAdditional reporting by Nayera Abdallah, Ahmed Tolba and Ahmad Ghaddar in LondonEditing by Louise Heavens, Will Dunham, Alexandra Hudson and David Goodman)

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