The 3 Ps approach to correcting oil markets

The 3 Ps approach to correcting oil markets

Saudi Arabia’s Energy Minister Prince Abdul Aziz bin Salman chaired the 23rd Joint Ministerial Monitoring Committee (JMMC) on Monday during what has undoubtedly been the most critical year in oil history.
The committee has been monitoring the effectiveness of a production cut strategy to balance global oil markets and stabilize the world economy.
The prince said that the collaboration of OPEC and non-OPEC producers will continue to do what is necessary to address imbalances in the market, but there is still work to be done in terms of compensatory cuts by the OPEC + alliance to stabilize inventory levels.
Although OPEC + had achieved a high compliance rate in September, he said: “The participating countries have promised us that they will increase their efforts to compensate in October and during the months of November and December so that they fulfill all their commitments, including the volume not compensated in September “.
OPEC + agreed to historic production cuts of 9.7 million barrels per day (bpd) from May to July after mobility restrictions triggered by the coronavirus disease (COVID-19) pandemic led to demand energy world fell to record levels.
Current OPEC + production cuts of 7.7 million bpd from August through December have effectively helped absorb the largest oil demand and price shock in history.
Starting in January, production cuts will be reduced to 5.7 million bpd, a figure that is still debated among many market participants amid current uncertainties about the recovery in demand.
Prince Abdul Aziz added: “I do not intend to indulge in market analysis or speculation about the direction of global energy markets. Rather, I want to underline the determination of OPEC + to follow the strategy that we have decided and to bring it to fruition. “

The so-called 4 P’s of marketing strategy (place, price, product and promotion) have been effectively modified by Saudi Arabia’s Energy Minister Prince Abdul Aziz bin Salman by encouraging the alliance to take a 3 P approach. for the oil market to “predict, prevent and be proactive”.

Faisal Faeq

The so-called 4 P’s of the marketing strategy (place, price, product and promotion) have been effectively modified by the minister to encourage the alliance to adopt a 3 P approach to the oil market of “predict, prevent and be proactive. “
Following this principle would give OPEC + the flexibility to adapt to changes in the oil market and “do what is necessary in everyone’s interest,” the prince said.
He noted that OPEC + producers were in regular contact with each other to monitor the market situation.
During talks leading up to the 23rd JMMC meeting, Crown Prince Mohammed bin Salman and Russian President Vladimir Putin had pledged their commitment to continue working together to maintain the stability of energy markets in line with the framework of the OPEC + alliance.

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

Disclaimer: The opinions expressed by the writers in this section are their own and do not necessarily reflect the point of view of Arab News