Kuwait and Saudi Arabia could be days from agreeing the restart of
oil production from the two fields they share in the so-called neutral
zone.
Bloomberg quoted Kuwait’s Oil Minister, Khaled Al-Fadel, as
saying during a news conference on Sunday that “We hope that by the end
of the year things will be cleared out and things will go back to
normal.”
The report is the latest in a series about Kuwait and
Saudi Arabia trying to resume production from the neutral zone despite
the latest extension and deepening of the OPEC+ oil production cuts.
Two fields in the partitioned zone—Khafji and Wafra—pumped half
a million barrels daily until 2015. Operational differences and a
worsening in bilateral relations led to the suspension of production
during that year. The worsening came as Saudi Arabia renewed Chevron’s
concession for Wafra. According to the Kuwaiti side, Riyadh did that
without consulting it.
Last year, there was talk about restarting
joint production after the United States called on its Gulf allies to
increase production to keep rising oil prices from going too high. In
September 2018 the Financial Times reported that
the two countries were mulling over a restart amid rising oil prices
and the matching rise in worry among large oil buyers.
This year reports
emerged that negotiations had restarted, with media outlets quoting
Saudi Arabia’s then-oil minister Khalid al-Falih as saying he hoped all
issued to be settled by the end of the year.
According to a source who spoke to Bloomberg, the
resumption of oil production from Khafji and Wafra will not add to
global supply because both Kuwait and Saudi Arabia comply with their
production quota under the OPEC+ agreement. Even so, any news about the
restart of the neutral zone fields would punish prices as all reports so
far have.
By Irina Slav for Oilprice.com
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