Opec+ will continue pursuing efforts to stabilise the oil market and will do “whatever is necessary”, Saudi Arabia’s Energy Minister has said.
Prince Abdulaziz bin Salman, who was speaking at the Opec Seminar in Vienna on Wednesday, said the market would not be left “unattended” and that the output policy announced on June 4 was “too big for people to comprehend”.
His remarks come after the world’s largest oil exporter said it would extend its voluntary production cut of a million barrels per day, which was initially announced for July, for another month.
Russia is also cutting its oil exports by 500,000 bpd in August on top of the output reductions that have already been announced, state news agency Tass reported on Monday.
Prince Abdulaziz said it was “more meaningful” for Moscow to reduce its oil exports and that the cut was voluntary and not imposed.
“Part of what we have done with … Russia is mitigating the cynical side of spectators,” he said.
Brent, the benchmark for two thirds of the world’s oil, has lost about 12 per cent of its value this year amid economic growth concerns and resilient Russian crude supply.
Brent was trading 0.47 per cent higher at $76.63 a barrel at 5.50pm UAE time on Wednesday.
“You cannot change negativity that is emanating from a ‘tell me’ kind of thing and not a ‘show me’ kind of thing,” Prince Abdulaziz said as he addressed the lukewarm market response to recent production cuts.
“People [also] overlook the fact that inflation is being managed and it has come down … the tools of the central bankers are working.”
The US Federal Reserve has raised interest rates 10 times to between 5 per cent and 5.25 per cent since March 2022 to bring down the high cost of goods.
Although inflation has fallen since its peak of 9.1 per cent last summer, Fed Chairman Jerome Powell has said it remains above the central bank’s long-term target.
Speaking at a separate panel session, the UAE’s Energy Minister indicated that the country would not participate in any additional voluntary output cuts.
“The voluntary cuts that apply in the Kingdom of Saudi Arabia [and] Russia as well … are very important,” Suhail Al Mazrouei said.
The minister also affirmed that voluntary oil output cuts by Opec and non-Opec producers have contributed to ensuring global oil market stability.
He also said that Opec+ may need to invite new members to join the group as it makes the group’s job easier.
“The more producers we have, the more sets of data we have and the [data] prediction is easier,” Mr Al Mazrouei said.
Opec+ countries currently produce about 40 per cent of all the world’s crude oil.
Last month, the alliance of 23 oil-producing countries agreed to stick to its existing output policy until the end of 2024.
The group has total production curbs of 3.66 million bpd, or about 3.7 per cent of global demand, in place, including a two million bpd reduction agreed last year and voluntary cuts of 1.66 million bpd announced in April.
Opec+ will continue to increase transparency in the market by engaging with third parties and independent institutions to verify the production capacities of member countries, Prince Abdulaziz said.
“The lessons learnt in attending to the Covid-19 crisis [led to] more transparency [and] clarity with market participants,” he said.
In April 2020, the Opec+ alliance announced its largest production cut of 9.7 million bpd as Covid-19 lockdowns hit global fuel demand and took Brent crude below $30 a barrel.
In an earlier speech at the event, Opec Secretary General Haitham Al Ghais said the oil producer’s group was pursuing market stability, adding that crude oil was “too central and fundamental” to the global economy.