RIYADH: Saudi Arabia’s Minister of Energy has insisted an agreement to cut oil production by two million barrels per day was made to sustain markets, not to raise prices.
Prince Abdulaziz bin Salman made the comments after the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, faced criticism for agreeing to reduce its output from November, with US President Joe Biden calling it “a disappointment”.
The minister said in a press conference after the OPEC+ meeting on Wednesday that “our current priority is stability in the market in terms of demand and investment.”
In an interview with Bloomberg, he went further, responding to suggestions of prioritizing profit directly.
“That mantra maybe could be acceptable if it is meant to be that we are deliberately doing this to jack up prices and that is not on our radar, our radar is to make sure we sustain markets,” he told Bloomberg.
Oil prices have not surged compared to coal and gas thanks to the OPEC+ and the effectiveness of its decisions, Prince Abdulaziz added.
The group's goal is to create a disciplined market that serves its real objective, as liquidity in the markets was affected by sharp fluctuations that caused prices to surge, according to the minister.
Prince Abdulaziz also indicated that there is currently no need for an additional cut in oil production by Saudi Arabia, as the agreement is considered good and appropriate for the current time.
“I said it in the press conference that in order for us to be attentive we have to be certainly assertive, preemptive and we have to be proactive,” he said.
The minister moved to quell suggestions that Saudi Arabia was the driving force behind the production cuts, insisting that the decisions taken in the group are unanimous and taken with the participation of all members.
Prince Abdulaziz said that the risks to the market come from strength of the dollar and higher interest rates.
He also indicated that it is not possible currently to judge the impact of the decision to set a price cap on Russian oil, until the passing of the next two months, given the state of uncertainty and lack of details and until the situation becomes clearer.
He added that it will then be possible to clarify the reaction of players and producers and accordingly make better decisions.
Lack of clarity on price cap adds uncertainty, he said, adding that uncertainty could go either way.
“Our hope that people can bring more certainty in many aspects, certainty in terms of interest rates, in terms of growth, in terms of foreign exchange, in terms of what this issue from Bargo caps and the rest of it including the zero covid policies,” he said.
The situation is now incomparable to any other throughout his 35-year career in the sector, according to the minister.
Prince Abdulaziz noted that even during the pandemic period, the market faced one variable which is COVID while currently, the market is facing a number of issues whose impact on the market may be positive or negative or a combination of both.
“It is a variety of convoluting uncertainties and they could go astray altogether, and to the positive side, or the negative side, or it could be a combination,” he said.