- The influential oil producer alliance led by Saudi Arabia and Russia is preemptively prepared to wait months for evidence from “real numbers” before adjusting its policies amid price volatility in the crude oil market, the Saudi energy minister said on Sunday.
- “Yes, we may be delayed in deciding what to do, but I would not abandon the precautionary approach, even if it takes longer than one, two, three, four or five months,” Prince Abdulaziz said am Salman on the sidelines of the MENA Climate Week in Riyadh.
- “I honestly believe that the best thing I can say is that the cohesion of OPEC+ should not be questioned. We’ve been through the worst, I don’t think we have to go through a terrible situation at all,” he said, amid growing concerns about an escalating conflict in Israel.
Saudi Energy Minister Prince Abdulaziz bin Salman speaks at the opening session of the Middle East and North Africa Climate Week in Riyadh on October 8, 2023.
Fayez Nureldine | Afp | Getty Images
The influential oil producer alliance led by Saudi Arabia and Russia is preemptively prepared to wait months for evidence from “real numbers” before adjusting its policies amid price volatility in the crude oil market, the Saudi energy minister said on Sunday.
“Yes, we may be delayed in deciding what to do, but I would not abandon the precautionary approach, even if it takes longer than one or two, three, four or five months,” Prince Abdulaziz said am CNBC’s Salman Dan Murphy on the sidelines of MENA Climate Week in Riyadh.
The Riyadh-led Organization of the Petroleum Exporting Countries and its non-OPEC allies, known collectively as OPEC+, agreed last October to cut 2 million barrels a day of production from the oil market and have stuck with it ever since. Since then, some OPEC+ members have implemented additional voluntary cuts outside of group decisions, with the cut of about 1.66 million barrels per day extending to the end of 2024 and Saudi Arabia and Russia each reducing their supplies by another million barrels per day and 300,000 barrels per day by the end of this year.
An OPEC+ technical committee, the Joint Ministerial Monitoring Committee, met on October 4 to review market fundamentals and each country’s compliance with production commitments. It concluded its meeting without calling an emergency ministerial meeting to adjust the production strategy.
Asked whether the group may need to consider further coordinated production measures to maintain market stability at the start of 2024, Prince Abdulaziz said: “We hope that we should not do that”, but stressed: “Never discard, what OPEC+ can do for the future.” The aim is to serve this market.”
The recent supply tightening and recovery in demand initially pushed prices up to nearly $95 a barrel, but they recently plunged again due to macroeconomic concerns triggered by a high interest rate environment. Since Moscow’s full-scale invasion of Ukraine, oil prices have been a major contributor to global inflation, particularly in Europe and the G7 countries, where consumers no longer have access to sanctioned Russian barrels.
The Paris-based International Energy Watchdog’s forecast last month that demand for oil, gas and coal will peak by 2030 weighed further on prices. This sparked loud objections from OPEC, whose representatives have repeatedly and controversially advocated simultaneous investments in fossil fuels and renewable energy to avoid short-term energy shortages.
“We want to show the world that we will use any energy source,” Prince Abdulaziz reiterated on Sunday, pointing out that the kingdom is “dead serious about the issue of climate change.” We are not the naysayers. In fact, we believe the science says it is there and we need to take care of it.”
The energy transition commitment of OPEC+ countries – including group member the United Arab Emirates, which will host the COP28 conference in late November – has been heavily criticized because of the high carbon emissions caused by the production and consumption of fossil fuels.
Observers are watching the open market to see which direction oil futures prices are heading after two days of renewed turmoil in the Middle East, where the Palestinian militant group Hamas launched a deadly and decisive attack against Israel that killed at least 600 people at the time Israelis lost their lives writing, according to official Israeli communications. The hostilities took place a day after the 50th anniversary of the fourth Arab-Israeli war. Crucially for crude oil markets, the 1973 offensive led to a global energy crisis that resulted from an embargo by the Saudi-led Arab oil-producing countries—supporting the Palestinian cause—against the United States for supporting Israel.
The latest conflict erupts at a volatile point in Middle East diplomacy, after months of persistent US pushes for normalization of ties between Israel and Saudi Arabia – which earlier this year resumed ties with arch-rival Iran, historically a supporter was Hamas.
Asked whether OPEC+ has the necessary tools to deal with the latest escalation between Israel and Hamas, Prince Abdulaziz deferred comment to the Saudi Foreign Ministry, but stressed that the alliance of oil producers “will see the ups and downs of the world “I’ve mastered it and we’ve dealt with the depths.” challenges, including the Covid-19 pandemic.
“I honestly believe that the best thing I can say is that the cohesion of OPEC+ should not be questioned. We’ve been through the worst, I don’t think we have to go through a terrible situation at all,” he added.