JEDDAH, Saudi Arabia, May 20, 2019 (BSS/AFP) – Oil supplies were sufficient
and stockpiles were still rising despite massive output drops from Iran and
Venezuela, said OPEC kingpin Saudi Arabia and key producer UAE on Sunday, as
oil exporters met in Jeddah.
Producer nations discussed how to stabilise a volatile oil market amid
rising US-Iran tensions in the Gulf, which threaten to disrupt global supply.
But “we see that (oil) inventories are rising and supplies are plenty,”
Saudi Energy Minister Khalid al-Falih told reporters at the start the
meeting.
“None of us wants to see the (oil) stocks swell again,” he added, with
reference to a supply surplus that sent prices sharply lower in the second
half of last year.
“We have to be cautious,” Falih said.
The UAE’s energy minister said there was no need to relax a deal by the
OPEC+ group of oil exporting countries to cut output by 1.2 million barrels
per day to support prices.
“We have seen inventory building. I don’t think it makes sense” to alter
the existing deal, said Suheil al-Mazrouei.
At the end of the meeting, Falih told a news conference the OPEC+ nations
were “unanimous in continuing to work to achieve stability between supply and
demand”.
The meeting “affirmed its commitment to achieving a balanced market and
working towards oil market stability,” said a statement issued at the end of
the gathering.
The statement said member states’ conformity to production cuts hit a
record 168 percent in April and an average of 120 percent since the start of
the year.
The meeting comes days after sabotage attacks against tankers in highly
sensitive Gulf waters and the bombing of a Saudi pipeline — the latter
claimed by Iran-aligned Yemeni rebels.
But Falih reiterated Sunday that the kingdom’s oil installations were well
protected.
“We have strong (oil) industry security”, he told reporters.
“Everybody is vulnerable to extreme acts of sabotage.”
The meeting also comes as the full impact of re-instated US sanctions
against Iran kick in, slashing the Islamic republic’s crude exports.
– Iran exports tumble –
Falih however cast doubt on reports that oil exports by Iran — which did
not send a representative to the meeting — dropped sharply.
“Nobody knows… it’s highly speculative and uncertain what Iran is
exporting… there is a lot of oil leaving Iran shores and waters,” he said.
Massive drops in exports by Iran and Venezuela come alongside output cuts
of 1.2 million barrels per day implemented by the OPEC+ group since January.
The International Energy Agency said last week Iranian crude production
fell in April to 2.6 million bpd, down from 3.9 million bpd before sanctions
were re-instated.
Iran’s output is already at its lowest level in over five years, but could
tumble in May to levels not seen since the devastating 1980-1988 Iran-Iraq
war.
Venezuela’s output — also subject to US export sanctions — is also
tumbling, down by over half since the third quarter of last year.
But exporters fear a rush to raise production to plug the gap left by
Iranian exports could backfire, triggering a new supply glut.
– Gulf tensions –
The meeting was held amid soaring Gulf tensions after the mysterious
sabotage of several tankers off the Emirati coast and drone attacks claimed
by Yemen’s Iran-aligned Huthi rebels, which shut a key Saudi crude pipeline.
Both attacks targeted routes built as alternatives to the Strait of Hormuz,
the conduit for almost all Gulf exports.
Iran has repeatedly threatened to close the strait in case of war with the
US, which said this month it was sending an aircraft carrier and strike group
to the region.
Saudi Arabia accused Iran of ordering the pipeline attacks, targeting “the
security of oil supplies… and the global economy”.
Saudi foreign affairs minister Adel al-Jubeir said Sunday his country does
not want war with Iran, but was ready to defend its interests.
Riyadh “does not want a war, is not looking for it and will do everything
to prevent it”, he told journalists in Riyadh.
Saudi Arabia called Saturday for urgent meetings of the Gulf Cooperation
Council and the Arab League to discuss escalating tensions, government news
agency SPA said.
It also said Crown Prince Mohammed bin Salman had spoken with US Secretary
of State Mike Pompeo about enhancing security in the region.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf
Cooperation Council began on Saturday “enhanced security patrols” in
international waters in “tight coordination with the US navy”.
Falih had said last month the kingdom was ready to boost supplies in case
of any shortage caused by the Iran embargo.
Iranian Oil Minister Bijan Namdar Zanganeh has said Washington’s stated aim
of bringing Iran’s oil exports “to zero” amounts to “an illusion”.