Saudi Arabia: Extending Voluntary Cuts Supports Market Stability

02 June 2024, Saudi Arabia, Riyadh: Ministers of Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman pose for a photo during the 37th OPEC+ ministerial meeting. Photo: -/Saudi Press Agency/dpa
02 June 2024, Saudi Arabia, Riyadh: Ministers of Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman pose for a photo during the 37th OPEC+ ministerial meeting. Photo: -/Saudi Press Agency/dpa
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Saudi Arabia: Extending Voluntary Cuts Supports Market Stability

02 June 2024, Saudi Arabia, Riyadh: Ministers of Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman pose for a photo during the 37th OPEC+ ministerial meeting. Photo: -/Saudi Press Agency/dpa
02 June 2024, Saudi Arabia, Riyadh: Ministers of Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman pose for a photo during the 37th OPEC+ ministerial meeting. Photo: -/Saudi Press Agency/dpa

Saudi Arabia’s cabinet on Tuesday welcomed the latest OPEC+ decisions, saying the Kingdom’s decision with seven other countries to extend their voluntary oil cuts aimed to boost precautionary efforts to support oil market stability.

OPEC oil-producing nations plus others including Russia make up OPEC+.

The OPEC+ alliance agreed on Sunday to extend its additional voluntary oil production cuts of 2.2 million barrels per day, initially announced in November 2023, until the end of September 2024.

The alliance also decided to extend the additional cuts of 1.65 million barrels per day, announced in April 2023, until the end of December 2025.

Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman met in person in Riyadh on the sidelines of the 37th OPEC and non-OPEC Ministerial Meeting.

Saudi Energy Minister Prince Abdulaziz bin Salman said that it is better for OPEC+ countries to remain cautious, in the context of the different views on the market and the continuing state of economic uncertainty.

“The group is moving hard and showing its cohesion and that it can stop or reverse course if necessary,” he told reporters after attending the OPEC+ meeting in Riyadh on Sunday.

On his part, Kuwait’s Oil Minister Imad Al-Atiqi affirmed on Tuesday that the economic conditions and interest rates were two main factors in determining market stability and supply and demand rates.

In a ministry press release, Al-Atiqi said that the OPEC and OPEC+ ministerial meetings that were held on Sunday came as part of OPEC+ efforts to help stabilize the oil market.

Al-Atiqi applauded the positive results of those meetings that would help restore balance in the oil market, in which they included the extension of voluntary output cuts until December 2025.

He called for being cautious during the revision of the oil market developments, pointing out that OPEC+ strategy towards the market will depend mainly on the pattern of those developments.

He stressed that the commitment of the OPEC+ member states in the voluntary reduction in an integrated manner is vital, as it will ensure market stability and interacting proactively with the dynamics of global oil demand.

Al-Atiqi praised Iraq, Russia, and Kazakhstan’s pledge to achieve full compliance with OPEC+ production targets and to submit their updated compensation plans to the OPEC Secretariat by the end of June 2024.

These plans address excess production levels since January 2024.

HSBC stated that the recent OPEC+ agreement has successfully maintained the cohesion of the alliance.

The bank kept its Brent crude price forecast unchanged at $82 per barrel for 2024, expecting it to average $80 per barrel in the second half of the year.

HSBC analysts noted that the outcome of the OPEC+ meeting was anticipated, as they had previously forecasted the continuation of production cuts until at least the end of 2025, given strong supply growth from non-OPEC sources.

Overall, HSBC indicated that OPEC+ plans to add approximately 2.5 million barrels per day to production from October 2024 to September 2025.

This includes the end of the second phase of voluntary cuts agreed upon in November 2023, amounting to about 2.2 million barrels per day, along with an additional 300,000 barrels per day from the UAE.



IMF Makes Progress Toward Reaching Staff Agreement with Pakistan on First Review of $7 Bln Program

People buy dry fruits at a market in Karachi, Pakistan February 1, 2023. (Reuters)
People buy dry fruits at a market in Karachi, Pakistan February 1, 2023. (Reuters)
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IMF Makes Progress Toward Reaching Staff Agreement with Pakistan on First Review of $7 Bln Program

People buy dry fruits at a market in Karachi, Pakistan February 1, 2023. (Reuters)
People buy dry fruits at a market in Karachi, Pakistan February 1, 2023. (Reuters)

The International Monetary Fund (IMF) and Pakistani authorities made significant progress toward reaching a staff level agreement on the first review of an ongoing $7 billion program, IMF Mission Chief Nathan Porter said in a statement on Saturday.

The mission and Pakistani authorities will continue policy discussions via video conference to finalize these discussions over the coming days, the statement said, according to the Pakistani newspaper, The News.

“The IMF and the Pakistani authorities made significant progress toward reaching a Staff Level Agreement (SLA) on the first review under the 37-month Extended Arrangement under the Extended Fund Facility (EFF),” Porter said in a statement on Friday.

The lender's team, led by Porter, was in Pakistan from February 24 to March 14 to hold discussions on the first review of Pakistan's economic program supported by the EFF and the possibility of a new arrangement under the lender's Resilience and Sustainability Facility (RSF).

The South Asian country, which has faced an economic meltdown in recent years, is treading a long path to economic recovery under the $7 billion IMF program it secured in September last year.

Meanwhile, the Pakistan-Afghanistan Joint Chamber of Commerce and Industry has called for immediate action from Islamabad to resolve the trade crisis with the Taliban and Central Asian countries.

The chamber’s president highlighted the negative impacts of the closed Torkham border crossing and transit taxes on Pakistan’s economy and regional trade.

Junaid Makda, president of the Pakistan-Afghanistan Joint Chamber of Commerce and Industry, said on Friday that increasing trade barriers, rising transportation costs, and the continued closure of the Torkham border are severely harming cross-border businesses.

Makda also warned of potential long-term damage to Pakistan’s economy due to the ongoing situation, stating that it forces traders to use Iranian ports instead of Pakistani routes, which will harm the country’s trade network.

The Torkham border has been closed for more than 20 days due to border tensions between Pakistan and the Taliban. Pakistan’s Ministry of Foreign Affairs has stated that the crossing will remain closed until the Taliban halt construction activities in the area.