Iraq pledges full compliance with OPEC+ oil cuts

Flames emerge from flare stacks at the oil fields in Basra, Iraq, January 17, 2017. (Reuters)
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Updated 08 August 2020
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Iraq pledges full compliance with OPEC+ oil cuts

  • Prince Abdulaziz bin Salman Al-Saud, the Saudi Arabian energy minister, and his Iraqi counterpart, Ihsan Ismail, reaffirmed their commitment to the cuts
  • Under tough economic pressure, Iraq had struggled to meet the full cuts, but Ismail promised to reach 100 percent this month

DUBAI: Iraq has pledged to meet in full its obligations under the OPEC+ oil production cuts that have been credited with rebalancing global crude markets after the mayhem of April’s “Black Monday” when prices crashed around the world.

In a telephone call between Prince Abdulaziz bin Salman Al-Saud, Saudi Arabian energy minister, and his Iraqi counterpart, Ihsan Ismail, the two men reaffirmed their commitment to the cuts, which have helped to pull the oil price back from historic lows.

Brent crude, the global benchmark, has more than doubled in the past three months.

Under tough economic pressure, Iraq had struggled to meet the full cuts, but Ismail promised to reach 100 percent this month. Iraq has now committed itself to an ambitious program of compensation to make up for past overproduction.

Iraq will further reduce production by 400,000 barrels per day this month and next, Ismail said, bringing its total cut to 1.25 million barrels daily. That level of cuts could be adjusted when final estimates of compliance are assessed by the six “secondary sources” that monitor OPEC+ output.

“The two ministers stressed that efforts by OPEC+ countries toward meeting production cuts, and the extra cuts under the compensation regime, will enhance oil market stability, help accelerate the rebalancing of global oil markets, and send a constructive signal to the market,” a joint statement added.

Prince Abdulaziz thanked Ismail for his efforts to improve Iraq’s compliance with the agreement.

Iraq had been the biggest laggard in the move toward 100 percent compliance by the 23 members of the OPEC+ alliance.

Officials in Riyadh told Arab News that Iraqi compliance had reached about 90 percent, a high level by the country’s previous standards but still short of the new targets.

Saudi Arabia has been forcefully advocating full compliance with the targets in an effort to remove oil from the global market as demand is still badly affected by the economic fallout from the COVID-19 pandemic.

The oil market will be under the spotlight later this month when the joint ministerial monitoring committee of OPEC+ energy ministers convenes virtually in the most recent of the monthly meetings set up to oversee the state of the global industry.

Oil had another strong week on global markets, breaking through the $45 barrier for the first time since early March on signs that the glut in US oil stocks was easing, as well as reductions in the amount of “floating crude” stored in tankers on the world’s oceans.

The price spiked on news of the Beirut explosion, which some analysts believed could herald a deterioration in regional security and a threat to oil exports.

Brent crude was trading at $44.70 on international markets.


Lucid’s move into Alkhobar marks a new phase in Saudi Arabia’s EV transition

Updated 38 min 17 sec ago
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Lucid’s move into Alkhobar marks a new phase in Saudi Arabia’s EV transition

ALKHOBAR: Lucid opened its first showroom in Alkhobar on Dec. 5, completing its presence across Saudi Arabia’s three largest regions and underscoring the rapid progress of the Kingdom’s electric-mobility push under Vision 2030.

The new Eastern Province location targets one of the nation’s highest-spending markets and reflects the deepening US-Saudi partnership behind Lucid in manufacturing, research and development, and talent.

For the EV maker, the move reflects pure market demand, according to interim CEO Marc Winterhoff.

“We didn’t have any coverage of the eastern region. It’s the third-largest market in KSA, and therefore it’s important for us to be here as well, closer to our customers,” he said.

Saudi Arabia has become one of Lucid’s most critical markets globally, not only as a buyer, but as a manufacturing base and a long-term strategic partner.

Winterhoff said the company is “super important in all of those categories,” highlighting how the Public Investment Fund’s backing enabled Lucid to grow jobs in the US while establishing its first international facility in the Kingdom.

“It’s widely known that we are majority funded by PIF, meaning the Kingdom of Saudi Arabia, which enabled us to build actually a lot of jobs in the US. Over 90 percent of our jobs … are in the US,” he said.

Lucid interim CEO Marc Winterhoff. Khalil Alazwari

At the same time, Lucid is expanding its assembly plant in King Abdullah Economic City and preparing to hire “thousands of people” as it ramps up production by the end of next year.

Alignment with Vision 2030, particularly the shift toward sustainability and the creation of entirely new industries, is becoming a defining pillar of Lucid’s strategy in the Kingdom. “Our vision is very much aligned with Vision 2030,” Winterhoff said.

He pointed to the emergence of a Saudi automotive cluster for the first time, with Lucid among the first manufacturers and others now entering the market. “There was no automotive industry before … and yeah, that wouldn’t be possible without the support.”

Regionally, Lucid Middle East President Faisal Sultan said the Gulf is entering a new phase of EV adoption driven by consumer readiness and government action.

“The whole country is going through a transformation right now. There is a renewed focus on sustainability and diversification to non-oil GDP,” he said.

While global supply chain issues briefly slowed EV momentum, demand in Saudi Arabia is now growing faster than in several other GCC countries.

Sultan said the Alkhobar showroom will play a direct role in accelerating adoption by exposing more customers to the vehicles.

“Once the customer is inside the car and sees a beautiful car that has amazing performance attributes, then the conversion is a sure deal,” he said.

Market behavior also shaped the decision to expand east. Many Eastern Province customers had been traveling to Riyadh to buy vehicles, a barrier Lucid sought to address. “It is a little bit of an inconvenience … so we really needed to be here,” Sultan explained.

The location’s economic weight also played a role. “There’s a lot of buying power here, and Lucid vehicles are a highly technological luxury vehicle. So it is the right place for Lucid to be.”

On charging, Lucid is working on a two-track approach: building infrastructure and educating customers. The company is pushing back against common assumptions around range anxiety by highlighting its vehicles’ capabilities.

“We are the longest-range vehicle in the world — 835 (km) to 838 km on a single charge,” Sultan said. He added that many drivers can travel from Alkhobar to Riyadh and might even go back on one charge.

The Lucid Air showcased inside the new Alkhobar studio. Khalil Alazwari

Lucid now provides a free home charger and free installation with every purchase, ensuring most customers rarely run low on battery in daily use.

The company is also expanding public charging through partnerships with hotels and offices. “We have about 50 of them across the country, and anybody can use it,” he said.

The localization push, a major pillar of Vision 2030, is another area where Lucid is scaling quickly. “We are 70-plus percent Saudized. That is an amazing feat because we are a technological company,” Sultan said.

The firm is also investing in a new R&D center in Riyadh, training Saudi engineers in the US through Human Resources Development Fund’s programs, and building a talent pipeline with institutions including KAUST, King Abdullah Economic City’s training academy NAVA, and technical universities.

Sultan said this effort is essential as the plant transitions next year from assembly to a complete build-unit factory with a planned annual capacity of 150,000 vehicles.

“You’re gonna need a large workforce,” he said. “This is all in preparation to localize the workforce and having the right skills available.”

With the Eastern Province now covered, Lucid’s footprint matches the Kingdom’s three economic engines: Riyadh, Jeddah, and Alkhobar, positioning the company at the center of Saudi Arabia’s EV transition.

And as both executives made clear, the Kingdom is not just a sales market for Lucid, but a core part of its global future.