OPEC+ tackling market uncertainties: Saudi oil minister

Saudi Arabia and its OPEC+ allies are trying to combat “uncertainties and sentiment” in the oil market as the group looks to tackle short sellers, its energy minister said on Sunday.

“I think the physical market is telling us something, and the futures market is telling us something else,” Prince Abdulaziz bin Salman told an Arab-China business forum in Riyadh. “That’s why we keep taking these precautionary measures.”

Saudi Arabia announced last week a unilateral cut of 1 million barrels a day for the month of July. The decision came after an OPEC+ meeting in which other producers agreed to extend their own existing cuts into 2024, without offering additional action.

Many energy analysts, as well as the Organisation of the Petroleum Exporting Countries, expect the oil market to tighten in the second half of the year as demand in China and India picks up further. But plenty of traders say high interest rates and economic weakness in the US and Europe will weigh on oil prices for at least the rest of the year.

“To understand OPEC+ today, it’s all about being proactive, preemptive and precautionary,” the minister said.

Last week’s meeting also saw the UAE secure a higher production quota for 2024 and Russia, the second largest OPEC+ producer, making no commitment to cut output deeper.

Prince Abdulaziz said that countries investing in boosting their oil production would be rewarded with a higher allocation for output.

Investors working with places that include Algeria, Iraq and the UAE “will see the merits for investing in these countries as they know the pendulum has swung to those who are investing”, he said.