OPEC+ to Stay Proactive After Agreeing Supply Cut: Saudi Energy Minister

Saudi Energy Minister Prince Abdulaziz bin Salman said that the Kingdom said that the first cut in oil supplies from the OPEC+ alliance in more than a year shows that the alliance is serious about managing global crude markets and is ready to take proactive measures. 

Prince Abdulaziz bin Salman said in an interview with “Bloomberg”, after the “OPEC+” alliance agreed to reduce production targets by 100,000 barrels per day in October, “This decision is an expression of the will that we will use all the tools in the our alliance.” 

He added, “The simple adjustment shows that we will be attentive, proactive and active in supporting the stability and effective functioning of the market for the benefit of market participants and the industry,” according to what Al has seen. 

The reduction came as a surprise to many traders who expected the Organization of the Petroleum Exporting Countries “OPEC” and its partners to keep production stable with oil prices rising above $90 a barrel. 

The market also looks set to get tougher in the coming months, as the EU imposes sanctions on Russian exports. 

However, OPEC+ is also facing a market where concerns about the strength of demand are beginning to outweigh supply concerns. Crude oil futures have lost about 20% in the past three months due to the threat of a global economic slowdown. 

China, the largest oil importer, showed signs of a “worrying” economic slowdown, as consumption evidently fell 9.7 percent in July to a two-year low amid weak business activity and severe “Covid-19” restrictions. 

The head of oil and gas research at Envirus, Bill Farren Price, said that the production cut “aims to send a signal that (OPEC +) is back in price control mode,” adding: “The alliance may believe that this step will be sufficient to deter any sellers.” out in the open.” 

Analysts expected the alliance to keep production stable in October, after increasing it by 100,000 barrels per day this month in response to pleas from US President Joe Biden. 

The Saudi Energy Minister, Prince Abdulaziz bin Salman, had already given two weeks ago an indication of a next political move.He said that the lack of liquidity means that futures prices have become very volatile, and detached from the realities of supply and physical demand. 

He added that the best way to restore balance might be to cut production, a proposal that won broad support from the rest of the alliance. 

The “OPEC +” alliance also faces the possibility of increasing supplies from Iran, which is still stuck in negotiations to revive the nuclear agreement and remove US sanctions on its oil sales, as a successful agreement could add more than one million barrels per day to global markets, according to the IEA, but there is still some work to be done before this happens. 

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