VIENNA: Saudi Energy Minister Khalid Al-Falih and his staff are busy these days. The minister and some of his aides are in continuous talks with global producers to convince them to attend the meeting of OPEC in Vienna on Nov. 30.
Saudi officials are inviting more African, Latin American and Central Asian countries to attend the meeting, sources told Arab News. The list of invitees includes producers such as Colombia, Egypt and Indonesia. “Not all those who are invited will attend but many have shown interest in attending the meeting as observers only,” a source said.
Saudi Arabia and Russia are leading global efforts to extend the current agreement to curtail production of 24 countries by 1.8 million barrels a day to rebalance the oil market and bring global inventories back to their five-year average. The agreement, which will expire in March, has helped to raise oil prices in the past few days to levels not seen since 2015.
The Saudi OPEC governor and Saudi national representative at OPEC are in communication with many countries to invite them to the meeting. They are traveling extensively to meet officials and other producers. Saudi Arabia is the president of OPEC’s ministerial conference this year.
“The Saudis are looking at ways to surprise the market at the meeting and by bringing many producers to it they are hoping to show the market that more producers are supporting the agreement,” a source said. “If some of those attending are willing to participate in the agreement then that would support oil prices.”
So far, the Saudi energy minister has brought two central Asian producers to attend the next meeting: Uzbekistan and Turkmenistan. Since October, the minister has also made trips to four countries that are part of the agreement to deliver letters from King Salman to the heads of states: Iraq, Malaysia, Algeria, and Kazakhstan.
Adding more countries to the agreement will help to reduce the burden on existing ones as the total amount of cuts will be distributed among a bigger number of producers, one of the sources said.
OPEC is expected to agree an extension of the cut as storage levels remain high despite recent drawdowns, although there are doubts about the willingness of some participants to continue to restrain output.
Many countries are showing support for extending the agreement. UAE and Iran are the latest two countries to express their support.
UAE Energy Minister Suhail Al-Mazrouei said on Nov. 20 that he sees the logic for extending the agreement and ministers are now focusing on the extension and not on increasing the amount of cuts in the agreement.
Iran’s oil minister Bijan Zanganeh said on the same day that the majority of OPEC nations favors the extension of the agreement.
Oil markets were tepid on Nov. 20 as traders were reluctant to take on big new positions before the OPEC meeting at the end of the month.
“The market expectation is for an extension through 2018, created by OPEC comments early this fall,” US bank Morgan Stanley said on Nov. 20 in a note to clients. “There is increased risk that OPEC delays the extension decision,” it said.
Saudi Arabia steps up oil diplomacy ahead of OPEC meeting
Saudi Arabia steps up oil diplomacy ahead of OPEC meeting
Marine insurance companies are considering canceling, repricing policies in the Middle East
RIYADH: Marine insurance companies are considering canceling or repricing policies in the Middle East, according to the Financial Times
This comes after the US and Israeli strikes on targets inside Iran, followed by missile attacks and retaliatory military actions in several countries in the region.
Marine brokers expect insurance premiums for ships to rise by up to 50 percent, given the region’s classification as a “war zone.”
Ship owners are considering rerouting their vessels to avoid the Strait of Hormuz and reduce risks to crews and cargo.
20% of the global oil supply passes through the Strait of Hormuz.
Regarding oil prices, a rise is expected as 20 percent of global oil supply passes through the Strait of Hormuz, amid concerns about continued tensions in the region.
Air traffic in the Middle East was severely disrupted after several countries closed their airspace completely or partially, while regional and international airlines suspended or rescheduled flights.
On the morning of March 1st, the Iranian capital, Tehran, witnessed several large explosions following Israel's announcement of what it described as a “preemptive strike.”
Flights to countries in the region suspended due to attacks
In a video message, US President Donald Trump announced that the US had begun “major combat operations” in Iran, asserting that the goal was to defend the American people by neutralizing what he described as the “imminent threat” from the Iranian regime.
Several regional and international airlines announced the suspension of their flights to some countries in the region due to the attacks.
These military developments come at a time when major shipping companies had already avoided the Red Sea and Suez Canal routes due to security tensions, reverting to the Cape of Good Hope route, which increases shipping costs and puts pressure on global supply chains.
With the closure of airspace in several countries in the region, the risk of disruption to air traffic and trade is increasing, while oil markets are watching closely for any signs of potential supply disruptions from a region that is one of the world's most important energy production hubs.
