Taking back control

Author Ben Winkley

"We should not jump the gun, we should not be complacent… we still have work ahead of us," Saudi oil minister Khalid al-Falih said in response to the idea that the Opec producer pact is "mission accomplished."

Opec used the Joint Ministerial Monitoring Committee (JMMC) meeting in Jeddah today to make a few things clear. It took back control, in the parlance of our time, of the message.

An observer this week may have been misled into thinking that Opec’s work was done. Various reports suggested the organisation’s attention was drifting away from the business of rebalancing the market and onto the bounteous rewards that come with higher prices. Today the organisation’s big hitters – among them Opec president Suhail Mohamed Faraj al-Mazrouei and Saudi oil minister Khalid al-Falih – lined up to rebut any suggestion of distraction. The latter, in fact, was strident in his insistence that the song remains the same.

“We are not using our decisions here on oil markets for a specific price target. We will take whatever price. We have been able to do rather well, we were doing OK with prices of $40-50/bl, and if they go up, the fiscal side will be better off. But that is not the driver for our decisions.”

Al-Falih downplayed a comment made by the IEA last week that the producer pact is approaching “mission accomplished“. “We should not jump the gun, we should not be complacent… we still have work ahead of us.”

The post-meeting statement backed this up. Commercial stocks remain above levels seen before the market downturn, the JMMC said, and it called for investigation of “different metrics” of assessing the market balance than OECD commercial stock levels.

Elsewhere, key non-Opec partner Russia clarified comments on its commitment. Oil minister Alexander Novak’s quotes appear to rule out any push from Moscow for an early unwinding of the cuts deal.

Sadly for Opec and its non-Opec friends, its command of the news cycle lasted about an hour. US president Donald Trump got out of bed extra early to tweet a broad, slightly rambling critique of events in Jeddah and the effects as he sees them. Scant mention was made of any geopolitical and economic risk arising from US foreign policy.

Playing to his own gallery, Trump in 140 characters managed to pin the blame for multi-year high pump prices firmly on events ex-America. In that, he too took back control.

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