‘Proactive’ Opec+ will ensure market stability, says Saudi minister

The Opec+ group of 23 oil-producing countries will be vigilant and proactive to ensure oil market stability, Saudi Arabia’s Energy Minister has said.

“We are dealing with such volatile situations [and] almost all of them have been generated and created [by situations] that we have nothing to do with,” Prince Abdulaziz bin Salman said at the Qatar Economic Forum yesterday.

Brent, the benchmark for two thirds of the world’s oil, has dropped more than 12 per cent so far this year amid demand concerns and a regional banking crisis in the US, which rattled financial markets.

Iraq, Opec’s second-largest producer, is committed to Opec+ supply cuts, the country’s Oil Minister Hayan Abdel Ghani said at the same event.

“Iraq, despite the economic problems that we have been through, has been committed to abide by the outcomes and the results of Opec meetings,” said Mr Ghani.

Referring to the Opec+ decision to reduce output, Prince Abdulaziz said the group had acted in a “responsible” way. “What we need to do [as a regulatory institution] in the future is continue delivering in our authority.”

On April 2, Opec+ members Saudi Arabia, the UAE, Iraq, Kuwait, Oman and Algeria announced voluntary output cuts of 1.16 million barrels per day. Last year, the group agreed to lower its output by two million bpd in response to growing signs of a global economic slowdown.

Prince Abdulaziz said much of the volatility in the oil market last year was created by the projections and forecasts of the International Energy Agency.

“They have proven that it really takes a special talent to be consistently wrong and that’s exactly what they have done.”

He also warned oil market short sellers that they could get hurt as traders turn bearish on concerns over a recession and the US potentially defaulting on its debt. “I keep advising them that they will be ‘ouching’. They did ‘ouch’ in April,” said Prince Abdulaziz.

Meanwhile, Qatar is “on track” to raise its liquefied natural gas production capacity to 126 million tonnes per annum by 2027 amid surging global demand, according to Saad Al Kaabi, Qatar’s Energy Minister.

Qatar, which signed a 27-year LNG deal with China in November, is “busy” negotiating with potential buyers, he said.

Mr Al Kaabi also said the “worst is yet to come” for Europe, as an unusually warm winter resulted in lower electricity demand.

Europe, faced with dwindling supplies from Russia, made it through the winter without an energy crisis as it faced less competition for LNG cargoes from China, whose economic growth was affected by strict Covid-19 curbs.

China, the world’s second-largest economy, reopened its borders in January and is expected to be a big driver of energy demand this year.