Saudi Arabia exports reliability to energy market

It was fortunate for the global economy that Saudi Arabia has been chairing the G20 at such a critical time. The COVID-19 pandemic did not stop the Kingdom from leading virtual meetings that led to essential decisions being made not just on concerted plans to fight the virus but also to help rebalance an energy market decimated by falling demand at a time of copious supply.

It has been a frenetic three weeks, which started with King Salman chairing an extraordinary virtual summit of G20 leaders to advance the global coordinated response to the pandemic. Another virtual meeting followed, this time with the OPEC+ group, where the Kingdom once again played a pivotal role in arriving at a consensus to slash production and this was followed by another key gathering of G20 energy ministers to cement the deal.

This deal was not, as some suggested, about the US achieving its own political gains with its own shale oil industry facing such a grave threat and seemingly impossible fight for survival.

Faisal Faeq

These recent events reflect Saudi Arabia’s increasingly important role in the global economy.

The events of recent weeks will be remembered for a long time in oil history as the Kingdom became not just a major exporter of oil but also an exporter of reliability and credibility.

The speed with which a deal was reached was, in part, an acknowledgment of confidence among other countries in its vision for restoring order to the energy market.

This deal was not, as some suggested, about the US achieving its own political gains with its own shale oil industry facing such a grave threat and seemingly impossible fight for survival.

It should be remembered that initial attempts to reduce production collapsed at the start of March when a cut of just 1.5 million barrels was on the table, which was followed by the withdrawal of Russia from the pact.

Just a month later, Saudi Arabia was able to lead negotiations that resulted in the OPEC+ nations slashing the equivalent of about 10 percent from global production.

• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq.