RIYADH: An OPEC+ decision taken in October to cut oil production by 2 million barrels a day turned out to be the right one for supporting the stability of the oil market despite being described as “very risky” and “unfortunate” at the time, Saudi Arabia’s energy minister said on Tuesday.
Speaking to the Saudi Press Agency, Prince Abdulaziz bin Salman said there were suggestions that the decision was driven by political motivations, would tip the global economy into recession, and would cause harm to developing countries.
“In retrospect, the OPEC+ decision turned out to be the right one for supporting the stability of the market and the industry,” he said.
He added that the oil cartel leaves politics out of the “decision-making process, out of assessments and forecasting, and focuses solely on market fundamentals. This enables us to assess situations in a more objective manner and with much more clarity and this in turn enhances our credibility.”
This could be seen at the beginning of the Ukraine conflict when some predicted large supply losses of more than 3 million bpd, which caused panic and contributed to extreme volatilities, the minister said.
“At that time, many accused OPEC+ of being behind the curve and not responding to a crisis in a timely manner. But these projected losses did not materialize,” he said.
Prince Abdulaziz added: “The problem with politicizing statistics and forecasting and using them to discredit OPEC+ and its stabilizing role is that it agitates consumers and creates confusion in the market and gives rise to anomalies and misguided interpretations, all of which contribute to unnecessary volatility.”
Playing politics with statistics and forecasting and not maintaining objectivity often tend to backfire and result in loss of credibility, the minister said.
He said the oil cartel would not hesitate to handle any market situation.
“The more credible we are, the easier our task is in bringing stability to markets, and the more stability we bring, the greater our credibility is cemented and recognized. This is a virtuous cycle that OPEC+ intends to maintain through objective and high-quality analysis and through keeping its focus on market fundamentals,” he said.