Saudi energy minister says OPEC+ cuts were needed to stabilize oil market

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman on Monday defended OPEC+ cuts to oil market supply, saying international energy markets need light-handed regulation to limit volatility.

Speaking at the World Petroleum Congress in Calgary, Prince Abdulaziz said there was ongoing uncertainty about Chinese demand, European growth and central bank action to tackle inflation.

Asked about Chinese demand, Prince Abdulaziz said the situation “is not bad yet.”

“The jury’s still out. This is the fundamental issue – the jury’s still out.”

Saudi Arabia and Russia on September 5 extended voluntary supply cuts of a combined 1.3 million barrels of oil per day to year end. The Organization of the Petroleum Exporting Countries, Russia and allied producers are known as OPEC+.

Oil prices have been climbing in recent months amid the supply cuts, raising worries in big consumer nations, like the US, of economic damage. Benchmark Brent futures rose close to $95 a barrel on Monday, with some analysts saying $100 is possible later this year.

The cuts will mean a substantial market deficit through the fourth quarter, the International Energy Agency (IEA) said on Wednesday.

But Prince Abdulaziz noted that supply and demand forecasts are not always reliable.

“It’s always better to go by my motto, which is, ‘I believe it when I see it.’ When reality comes around as it’s been forecast, Hallelujah, we can produce more.”

Prince Abdulaziz took aim at IEA’s role.

“They have moved from being a forecaster and assessor of the market to one practicing political advocacy,” he said.

Prince Abdulaziz said Saudi Arabia also wants to produce and trade clean hydrogen and electricity, but needs partnerships with other countries, offtake buyers, and investors.

The congress is a five-day gathering of officials from oil-producing companies and countries in Calgary, Alberta, Canada’s oil capital.