The government of the Sultanate of Oman has greeted the decision by the Opec+ alliance to maintain production cuts through April as a “positive step” that helped propel international oil prices to their highest levels in nearly 15 months, according to a report.
A high-level official of the Ministry of Energy and Minerals reaffirmed non-Opec Oman’s continued support for the alliance’s efforts to stabilise global oil markets and help aid a recovery in crude oil demand, which had collapsed in the wake of the pandemic last year, the Oman Observer newspaper reported.
“We are happy with the outcome of the Opec+ alliance meeting on Thursday and its decision to roll over the production cuts to cover April as well,” said Ali bin Abdullah al Riyami, Director-General of Oil Marketing at the Ministry.
“Oman is committed to fully complying with these latest cuts, as it indeed has with the agreements reached by the alliance in the past.”
The official accompanied Dr Mohammed bin Hamad al Rumhy, Minister of Energy and Minerals, at Thursday’s virtual meeting of the 23-member Opec+ alliance where the grouping resolved to extend globally agreed production curbs into April as well.
The alliance also decided to meet on April 1 to weigh the need for a relaxation in output cuts or to maintain the status quo based on market conditions.
Following the announcement, the market price of the Oman Crude Oil Futures Contract (OQD) soared to $66.41/barrel on the Dubai Mercantile Exchange on Thursday (for May 2021 delivery) for the first time in nearly 14 months.
The Omani benchmark gained $3.37/b in trading on Thursday, rising from the previous session’s figure of $63.04/b.
Thursday’s high was last seen in January 2020.
As a result of the Opec+ alliance’s latest decision, Oman’s production will remain capped at 732k barrels per day (bpd) for April 2021, similar to levels agreed for the months of January, February and March this year, said Al Riyami.
This represents a production cut of 151k bpd from the October 2018 baseline levels of 883k bpd, he noted.
In remarks to the Observer, the official credited this week’s strong oil price rally to, among other factors, the alliance’s weekend decision.
“It’s clear that prices began to rise as soon as Opec+ announced its decision to roll-over production cuts. So any positive decision from the alliance will have a positive impact on prices — something we have seen in the past as well,” he said.
Also buoying oil prices, Al Riyami pointed out, were positive outlooks from a number of international agencies about a global economic recovery beginning to gain traction.
“Multilateral institutions such as the IMF and the World Bank have said they believe the global economy is gradually improving.
Asian economies are showing growth as well, particularly as the rollout of Covid-19 vaccines is becoming a full-fledged exercise in many countries around the world. While there are worries about new Covid-19 strains, there are positive indications that the vaccines may be effective against them.”
Underpinning the effectiveness of the production cuts in shoring up international oil prices is the high degree of compliance achieved by producers, according to the official.
“Compliance by producers is 105 per cent, demonstrating that the majority of countries are in conformity with their targets. In fact, there are some countries that exceed their targets by more than 100 per cent, thus compensating for the tiny minority who did not meet their commitments. But the great majority of countries are in full compliance, which is a very good development.”
Al Riyami also commended the roles played by leading producers Saudi Arabia and Russia in contributing to Thursday’s collective decision by the Opec+ alliance. “With these positive indications coming from the two key players, the future for the global energy industry and the wider economy promises to be brighter. Let’s only hope that Covid-19 begins to recede in order for the world economy to recover soon enough, he added, the report concluded.
