Saudi energy minister predicts era of ‘perpetual stability in world oil’

Saudi Energy Minister Prince Abdul Aziz bin Salman at the Energy Week International Forum in Moscow. (Reuters)
Updated 06 October 2019

Saudi energy minister predicts era of ‘perpetual stability in world oil’

  • Kingdom’s ‘marriage of convenience’ with Russia will benefit global economy, Moscow industry summit hears

MOSCOW: The relationship between Saudi Arabia and Russia brings an opportunity for “perpetual stability” in global oil markets, Prince Abdul Aziz bin Salman, the Kingdom’s energy minister, told a gathering of energy industry leaders in Moscow.

“We could not be doing better than what we are doing today. It’s quite a marriage of convenience. We are in an alliance because there is a lot of rationale in that alliance. It did not come because there is emotion in it, but is a result of straight thinking about what we could do together,” the minister told a packed hall at the Russian Energy Week summit of global energy leaders in Moscow.

The panel was on the theme of “global energy — new alliances,” and both the energy minister and his Russian counterpart Alexander Novak stressed the common interests in the “OPEC+” arrangement, whereby global oil producers coordinate output levels to ensure price and supply stability.

Prince Abdul Aziz said: “I am always conscious of the effect of the oil market on the global economy, and I believe the OPEC+ agreement will help ensure the perpetual stability of the oil market to the benefit of producers, consumers, the energy industry and the world economy.”

Novak agreed that the output agreement — signed first in 2017 and reinforced with a charter last year — had brought “some stability” to global oil markets, but he was worried about what he called “black swans” in the form of global economic and geopolitical factors.

FASTFACT

OPEC members supply about 43.5 percent of the world’s crude oil production.

“There is a lot of uncertainty in the market. For example, trade wars between certain countries is leading to lower demand and consumption. There are also sanctions introduced by one big country that seems to proclaim weekly sanctions against some other country,” he said, in a reference to US actions against Russia and others.

“Black swans are more important than supply and demand in the oil market at the moment, but it is good we have common ground in the oil markets,” Novak added.

In a keynote speech later, President Putin said that the OPEC+ deal was “the first-ever successful interaction between OPEC and non-OPEC.

“What matters is supply predictability and reliability. We have a business-like approach with our energy partners in Europe and the rest of the world, of a commercial nature with no political reasoning,” Putin added.

Mohammed Barkindo, secretary general of OPEC, told delegates: “OPEC+ has become a reliable and dependable source of supply. The world should not panic.”


Oil prices rise as faith in supply cuts grows

Updated 15 min 49 sec ago

Oil prices rise as faith in supply cuts grows

  • Producers are following through on commitments to cut supplies as fuel demand picks up with coronavirus restrictions easing
  • OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices

NEW YORK: Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures were up 45 cents, or 1.3%, at $35.98 a barrel by 1:09 p.m. EDT (1709 GMT). US West Texas Intermediate (WTI) crude futures gained 89 cents, or 2.7%, to $34.14.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.
Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.
The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.
On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.
“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the US rig count hit a record low of 318 last week.