OPEC, non-OPEC States Commit to Production Reduction

Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)
Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)
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OPEC, non-OPEC States Commit to Production Reduction

Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)
Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)

After ministers of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC independent producers finished their meeting in Jeddah and attended a luncheon, US President Donald Trump bashed on oil prices, which he considered "artificially" high.

“Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!” Trump Tweeted.

Energy ministers, including Russian Minister Alexander Novak and OPEC Secretary General Mohammed Barkindo, defended their position strongly, saying that without OPEC, the US oil industry could not continue its production, given that US producers are the first to benefit from high prices.

The Russian minister said that prices are determined by the market.

UAE Energy Minister Suhail al-Mazroui, who heads OPEC's ministerial conference this year, told reporters after lunch that there was no such thing as artificial prices.

The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC), which monitors the deal, met on Friday in Jeddah, Saudi Arabia, to discuss producers' commitment to implementing a cut-off agreement and discuss prices.

Following the meeting, OPEC issued a statement announcing that, based on the Report of the Joint Technical Committee (JTC) for the month of March 2018, following successive months of record-breaking performances, OPEC and participating non-OPEC countries have achieved a conformity level of 149 percent with their voluntary production adjustments, the highest level so far.

The meeting reviewed the developments in the oil markets and levels of production of the participating countries, the work of the committee and the results of decisions issued in the previous meetings.

It is noteworthy that JMMC hold a meeting every two months under the chairmanship of the Kingdom, to discuss the commitment of countries to the agreement, which includes Kuwait, Venezuela, Algeria, Saudi Arabia, Russia and Oman.

OPEC Sec-Gen Mohammad Barkindo said members of the oil producers group were friends of the US and have a vested interest in its growth and prosperity.

Barkindo made his remarks after Trump sent a tweet criticizing OPEC over high oil prices.

"The Declaration of Cooperation by 24 producing countries in Dec. 2016 which was implemented faithfully since 2017 has not only arrested the decline but rescued the oil industry from imminent collapse," Barkindo said.

Iraqi Oil Minister Jabar al-Luaibi said oil prices are “not very high” following Trump's tweet. “Everything is now fine and the market is stabilizing,” Luaibi told the press.

UAE Energy Minister Suhail Mohamad al-Mazrouei also said oil prices were not artificially high.

Oil prices fell after the US president criticized OPEC, but it is still heading for a weekly gain.

Brent crude oil futures LCOc1 gained 28 cents, or 0.4 percent, to settle at $74.06 per barrel. West Texas Intermediate crude futures CLc2 for delivery in June, the most active US contract, were up 7 cents at $68.40. The May WTI contract, which expired on Friday, CLc1 gained 9 cents, or 0.1 percent, to settle at $68.38.

The United States can only legitimately influence oil by withdrawing from its strategic reserve, which it has done from time to time.

Saudi Energy Minister Khalid al-Falih said OPEC and its allies were far from reaching their goal and that the reduction of oil stocks needs to continue.

"The countries involved in the reduction of oil production have shown a commitment to seeking a balance in the global oil market where the levels of the OECD's trade stock have been adjusted from a peak of 3.12 billion barrels in July 2016 to 2.83 billion barrels in March 2018, a decrease of 300 million barrels," Falih was quoted by Saudi Press Agency (SPA).

Falih expressed his appreciation to the importance of Russia's role in the declaration of cooperation describing Russia as an effective element in reaching the agreement and its success over the past months. He also praised the important role played by the Russian Energy Minister who co-chaired the JMMC since its inception at the beginning of 2017.

Falih stressed the importance of monitoring the market and the commitment of the oil-producing countries, indicating that the success achieved at the level of the Joint Ministerial Committee to monitor oil production in 2017 will be going on in 2018.

Aside from OPEC's supply management, crude prices also received support from expectations that the US would re-impose sanctions on Iran, a member of the organization.

OPEC and non-OPEC oil producers could begin easing up on output curbs before the end of the year, according to Russian Energy Minister Alexander Novak.

“The agreement lasts until the end of the year. In June, we can discuss, among other issues, a question about reduction of some quotas during this time, if it is expedient from the market’s point of view,” Novak said ahead of the JMMC meeting, TASS news agency reported.

Sources familiar with the meeting told Reuters that Novak told his OPEC and non-OPEC counterparts in a closed-door meeting that Moscow was committed to the deal on cutting output until the end of 2018.

The OPEC, non-OPEC ministerial panel said commercial oil stock levels of Organisation for Economic Co-operation and Development (OECD) were 2.83 billion bbl in March 2018, still above the level seen before the oil market downturn.

Three industry informed sources stated this week Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel indicating Riyadh will likely seek no changes to the deal in June.

Energy Minister Falih said OPEC and non-OPEC compliance with the output deal reached 149 percent in March. The deal’s success has helped relations between Russia and Saudi Arabia.

Germany’s Handelsblatt newspaper reported on Friday UAE oil minister Mazrouei saying that he believes more oil producers need to join OPEC and non-OPEC producers in curbing supply.



Saudi Arabia's Non-Oil Exports Hit Historic High of SAR515 Billion in 2024

A night view of Riyadh, Saudi Arabia. (SPA)
A night view of Riyadh, Saudi Arabia. (SPA)
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Saudi Arabia's Non-Oil Exports Hit Historic High of SAR515 Billion in 2024

A night view of Riyadh, Saudi Arabia. (SPA)
A night view of Riyadh, Saudi Arabia. (SPA)

Saudi Arabia's non-oil exports reached an unprecedented SAR515 billion in 2024, marking the highest value in the Kingdom's history. This achievement represents a significant 13% increase compared to the previous year and an impressive growth of over 113% since the launch of Vision 2030.

The robust growth spanned all export sectors. Merchandise exports climbed to SAR217 billion (+4%), fueled by respective increases of 2% and 9% in petrochemical and non-petrochemical exports, reported the Saudi Press Agency on Saturday.

Re-exports surged to SAR90 billion, demonstrating a remarkable 205% growth since the inception of Vision 2030. Services exports also reached an all-time high of SAR207 billion, exhibiting a 14% year-on-year increase and a substantial 220% rise since Vision 2030's announcement.

Saudi Export Development Authority CEO Abdulrahman Althukair attributed this historic non-oil export performance to the Kingdom's sustained efforts in economic diversification and enhancing the competitiveness of national products.

He highlighted the authority's commitment to facilitating national companies' access to new markets and bolstering their export capabilities through comprehensive programs encompassing training, empowerment, promotion, and advisory services. This aligns with Vision 2030's goals to establish a thriving economy where non-oil exports are a key driver of sustainable growth.

In 2024, petrochemical commodity exports amounted to SAR149 billion, constituting 68% of total commodity exports, and registered a 2% increase in value and weight compared to the previous year.

Non-petrochemical commodity exports achieved a remarkable SAR69 billion (32% of total commodity exports), the highest value in recent years. This included record export figures for over 205 Saudi products, such as food and dairy products, minerals, and building materials. Fertilizer exports also demonstrated exceptional growth, with product weight reaching a historic peak in 2024, increasing by 5% year-on-year, and more than fivefold in value since the launch of Vision 2030.

The Kingdom's re-export sector also delivered a historic performance in 2024, reaching SAR90 billion, a 205% increase compared to 2016, a 42% rise year-on-year, and a 114% increase compared to 2019. This was primarily driven by the re-export of mobile phones, which reached a record value of SAR25 billion, more than doubling their 2023 value. The operation of the integrated logistics zone at King Khalid International Airport played a significant role in this remarkable growth by enhancing supply chain efficiency and facilitating re-export operations.

Machinery, automated devices, transportation equipment, and parts thereof constituted 84% of total re-exports in 2024. Re-exports of aircraft parts also experienced substantial growth, increasing from SAR1.6 billion in 2022 to over SAR2 billion in 2024.

In 2024, the Kingdom exported goods, re-exports, and services to over 180 countries, with 37 countries registering record import values, including the UAE, Bahrain, Iraq, Oman, Algeria, Spain, France, Poland, Libya, and Syria. Other countries, such as Indonesia, Thailand, Morocco, Pakistan, Nigeria, Germany, Greece, and Bulgaria, also achieved record import volumes.

Services exports reached a record SAR207 billion in 2024, marking a 14% year-on-year increase and a 220% rise since 2016. The travel and tourism sector was a key driver, increasing by 270% since 2016. In 2024, Saudi Arabia welcomed approximately 30 million international tourists, contributing to a 150% increase in travel exports compared to 2019, representing 74% of total service exports.

The Kingdom also recorded a 69% increase in international tourist numbers compared to pre-pandemic levels and a 148% increase in tourism revenues compared to 2019. Saudi Arabia led the G20 in tourist number growth, with a 73% growth rate during the first seven months of 2024 compared to the same period in 2019. The transportation sector contributed 12% of total service exports, achieving a 5% year-on-year growth.