Saudi Arabia’s oil minister warns market watchers to ‘watch out’ ahead of OPEC+ meeting

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Abdulaziz bin Salman, Saudi Arabia’s energy minister, speaks during a panel session at the Qatar Economic Forum in Doha, Qatar on May 23, 2023.

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Saudi oil minister Prince Abdulaziz bin Salman on Tuesday told market traders to “be careful,” repeating his warning that they could be in for some pain.

“Assignors, like in any market, they are here to stay. I keep advising them to cry. They did ouch in April. I don’t have to show my cards, no i am not [a] poker player (…) but I would just tell them, be careful,” he said at an energy-focused panel of the Qatar Economic Forum in Doha.

The Saudi oil minister has previously come out against oil price profiteers who want to profit from predicting the production decisions of OPEC +, which will meet the next day on June 4.

Recently, several members of the OPEC+ alliance voluntarily announced – and independently of the group’s wider strategy – that they would cut their crude oil production by 1.6 million barrels per day. The move brought a brief spike in prices, which have reaped benefits ever since. Brent Ice futures for July settlement were up 50 cents a barrel from May 22 settlement at $76.49 a barrel by 12:05 p.m. London time.

OPEC+, a group of 23 oil producing countries chaired by Saudi Arabia, decided in October to reduce production by 2 million barrels per day in an attempt to strengthen prices, due to concerns about global consumption. The move was met with immediate backlash from the US over the pressure on fuel-consuming households.

“We were blamed, as OPEC+, in October, blamed in April. Who has the right numbers? Who measured the situation in a much more, I would say, careful way, but attentive?” Abdulaziz said on Tuesday.

“I think over the last six-seven months we have been a responsible regulatory institution,” he said, adding that the market is experiencing continued volatility and calling on OPEC+ stay proactive and proactive.

In the weeks since April’s voluntary cuts were announced, crude prices have been depressed by banking turmoil, signs of a recession and Beijing’s slower-than-expected reopening and increased demand from China, the in -the world’s largest exporter of crude oil.

Market watchers are now questioning whether OPEC+ will move in June to another production cut to crutch prices, even as the Paris-based watchdog IEA now sees a deep supply squeeze on the horizon.

“The current market dose … stands in stark contrast to the tighter market balances we expect in the second half of the year, when demand is expected to “exceeding supply by nearly 2 mb/d,” the IEA said in its latest Oil Market. May report.

The group’s Executive Director Fatih Birol nevertheless told CNBC on Sunday that a US debt default could – if not likely – lead to a drop in oil demand and prices.

In a May 17 note, analysts at Swiss bank UBS cut their Brent price forecasts by $10 a barrel to $95 a barrel by the end of the year, with crude oil volumes exceeding expectations and fears decline They expect that there will not be nearly 1.5 million barrels per day on the market in June.

“With a number of OPEC+ member countries voluntarily removing barrels from the market, and amid growing demand this summer in the Northern Hemisphere, we expect will result in greater investment attractions and bring investors back into the oil market,” they said.

Saudi Arabia’s oil minister on Tuesday also stressed the risks of market uncertainty, along with a progressive depletion of spare capacity in producing countries – an argument he has used in the past to plead for more investment. peak in fossil fuels, as well as spending on renewable projects.

“Look where we are now: energy security is being shaken, running out of possibilities because countries are not investing in both oil and gas,” he said.

“We have a very funny approach to where demand will be. So if you are a hedge, as we are, we need to act to prevent further volatility (… ) but we fully accept the challenge. , and we will continue to rise to the challenge.”

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