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Kuwait’s Decision to Cut Oil Output is ‘Sovereign’

Kuwaiti Oil Minister Khaled al-Fadhel arrives at the OPEC headquarters in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger
Kuwaiti Oil Minister Khaled al-Fadhel arrives at the OPEC headquarters in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger
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Kuwait’s Decision to Cut Oil Output is ‘Sovereign’

Kuwaiti Oil Minister Khaled al-Fadhel arrives at the OPEC headquarters in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger
Kuwaiti Oil Minister Khaled al-Fadhel arrives at the OPEC headquarters in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger

Kuwaiti Oil Minister Khaled al-Fadhel has said that Kuwait took a “sovereign decision” to start cutting oil output ahead of May 1.

The country supports collective action, consensus among OPEC member states, and the OPEC+ agreement, the minister said, affirming that it has adhered to its output quotas as agreed upon in previous deals over the past years.

Kuwait “felt responsibility to respond to market conditions” and acted on its own, Fadhel said, according to the official Kuwait News Agency. He also called for maintaining "spirit of team work to face forthcoming challenges emanating from the coronavirus impact on the global oil demand."

The present period requires joint efforts within OPEC and partners in OPEC+, the minister said, describing the phase as unprecedented in history of oil.

OPEC and non-OPEC partners agreed on April 13 to reduce their combined oil production by 9.7 million bpd in May and June.

For the following six-month period, from July 1 to Dec. 31 this year, the total output cut will be eased to 7.7 million bpd. This will be followed by a 5.8 million bpd adjustment for a period of 16 months, from Jan.1, 2021 to April 30, 2022.

According to the OPEC statement, both Saudi Arabia and Russia will lower their individual productions from the level of 11 million bpd.

The current agreement will be valid until April 30, 2022, with the review of a possible extension in December 2021.

The 10th Extraordinary OPEC and non-OPEC Ministerial Meeting was held via video-conference, under the Chairmanship of Prince Abdulaziz bin Salman, Saudi Arabia’s Minister of Energy.

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Saudi Arabia Provides $500 Million in Financial Support to Yemen

Saudi Arabia Provides $500 Million in Financial Support to Yemen
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Saudi Arabia Provides $500 Million in Financial Support to Yemen

Saudi Arabia Provides $500 Million in Financial Support to Yemen

The Kingdom of Saudi Arabia has given new economic support to Yemen, worth $500 million, to strengthen the Yemeni government's budget and bolster the Central Bank of Yemen.
The Saudi support package consists of a $300 million deposit in the Central Bank of Yemen, to improve the economic and financial situation, and $200 million to deal with the Yemeni budget deficit, out of a total pledge of $1.2 billion.
According to SPA, the funding, through the Saudi Development and Reconstruction Program for Yemen (SDRPY), aims to enhance food security, support salaries and wages, cover operating expenses, and help the government implement its economic reform program.
It also seeks to help set the basis for economic, financial, and monetary stability in the Republic of Yemen, strengthen this country’s public finances, enhance the capacity of government institutions, and improve governance and transparency. It also aims to empower the private sector to drive sustainable economic growth and create job opportunities, ultimately placing the national economy on a more sustainable path and driving economic and social development.
Previous Saudi deposits positively impacted the foreign exchange reserves of the Central Bank of Yemen, reduced the exchange rates, and contributed to the growth of the GDP. They also helped lower fuel and diesel prices, as well as the cost of imported food commodities.
Together with previous assistance, including grants and deposits, this aid aims to buttress Yemen's economic stability.
Key contributions of Saudi support include covering imports of essential food commodities (wheat grains, wheat flour, rice, milk, cooking oil, and sugar), strengthening the Central Bank's foreign exchange reserves, stabilizing the local currency, and reducing fuel and diesel prices.
While Saudi grants have positively impacted economic and social development in Yemen, and supported the national economy, they also helped mitigate the economic deterioration by increasing the foreign exchange reserves and boosting confidence in the Central Bank of Yemen.
Moreover, these grants led to greater financial transfers and foreign aid, thus strengthening the balance of income and transfers in Yemen.
The grants effectively stimulated economic growth while lessening inflationary pressures. By enabling the government to cover salaries and wages, they significantly reduced the budget deficit, which, in turn, improved the financial stability of the country and lowered the government's reliance on borrowing to finance its expenditures.
The grants greatly helped improve the performance of critical sectors. In healthcare, it funded essential medicines for chronic diseases and cancer treatment. It also came to the help of education and other vital sectors, and covered the cost of petroleum derivatives for electricity generation.
The Kingdom also significantly contributed to Yemen's economic growth by providing grants for petroleum derivatives. These grants enabled 80 power generation stations to operate in all Yemeni governorates, thus stimulating the Yemeni economy and enhancing the efficiency of vital, productive and service sectors in Yemen.
Through SDRPY, the Kingdom has implemented 263 development projects and initiatives in various Yemeni governorates. These projects serve the Yemeni people in eight crucial sectors: education, health, water, energy, transportation, agriculture and fisheries, capacity building of the Yemeni government, and development programs.