VIENNA: Defending the decisions made by the oil producers’ alliance, Saudi Energy Minister Prince Abdulaziz bin Salman stressed the need to “trust OPEC+” which he described as “the most effective international organization” working to restore market stability.
Talking to CNBC International’s Dan Murphy on Sunday, the energy minister said the voluntary oil output cuts announced by the Organization of the Petroleum Exporting Countries and its allies including Russia, also known as OPEC+, were precautionary measures.
“It was just our sensibility, if you will call it, that the environment was not sufficiently allowing confidence to be there. So taking a precautionary measure tends to put you on the safe side. And it is part of the typical rhythm that we have installed in OPEC, which is being proactive, being preemptive,” Prince Abdulaziz said.
Oil prices rose by more than $1 a barrel on Monday after Saudi Arabia pledged to cut production by a further 1 million barrels per day from July to counter macroeconomic headwinds that have depressed markets.
The voluntary cut is on top of a broader deal by OPEC+ to limit supply into 2024 as the group seeks to boost flagging oil prices.
OPEC+ pumps about 40 percent of the world’s crude and has cut its output target by a total of 3.66 million bpd, amounting to 3.6 percent of global demand.
Commenting on the Saudi decision, Prince Abdulaziz said: “It is icing on the cake.”
The Kingdom has kept the option open for an extension to the voluntary cuts depending on “how things really work.”
The Saudi energy minister told CNBC that the oil producers’ group is considering new baselines to ensure equitable and fair production quotas for all members in the group according to their capacities in a transparent manner.
OPEC+ now intends to have three independent analysts — IHS, Wood Mackenzie, and Rystad Energy — study the individual capacity of each group member.
“Hopefully by mid-year next year, we will have new baselines and a way forward that makes it more equitable, more fair for everybody to assign for them production levels that are going to be commensurate with their capacities in the most transparent way,” the minister said.
When asked about trusting OPEC’s ally Russia, Prince Abdulaziz responded in the affirmative.
“Absolutely. But I always like President (Ronald) Reagan’s line: trust but verify.” He said, noting the instrumental role of independent sources in assessing production.