Saudi oil minister warns market speculators to be ‘careful’ ahead of OPEC+ meeting

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

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Saudi Oil Minister Prince Abdulaziz bin Salman told market speculators on Tuesday to “watch out” and warned they could face pain.

“The speculators, as in any market, they’re there. I keep advising that they’re going to ooh. They oohed and ahhed in April. I don’t have to show my cards, I don’t. [a] Poker player (…) But I would tell them, be careful,” he said during the Qatar Economic Forum’s energy-focused panel in Doha.

The Saudi oil minister earlier hit out at oil price speculators who are looking to profit by predicting production results from OPEC+ meeting on June 4.

Most recently, several members of the OPEC+ alliance voluntarily – and independently of the group’s broader strategy – announced that they would cut their crude oil production by 1.6 million barrels per day. The move briefly boosted prices, and then they surrendered the gains. Ice Brent futures for July expiration were up 50 cents at $76.49 a barrel by 12:05 p.m. London time for May 22 settlement.

OPEC+, a group of 23 oil producers led by Saudi Arabia, decided in October to cut production by 2 million barrels per day in an attempt to boost prices, citing concerns about global consumption. The move drew immediate backlash from the US over pressure on fuel-consuming households.

“We, as OPEC+, were accused in October, accused in April. Who has the right numbers? Who overestimated the situation, I would say, in a responsible way, but carefully?” Abdulaziz said on Tuesday.

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“I think we have proven in the last six-seven months to be a responsible regulatory agency,” he added, noting that the market continues to experience volatility and OPEC+ needs to be proactive and proactive.

In the weeks since April’s voluntary cuts were announced, crude prices have fallen on a backdrop of banking turmoil, recession signals and a slower-than-expected reopening of Beijing and rising demand from China, the world’s biggest crude importer.

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

“Current market pessimism … stands in stark contrast to the tighter market balances we expect in the second half of the year, with demand expected to eclipse supply by nearly 2 mb/d,” the IEA said in its latest oil market report. May Report.

Still, the agency’s executive director, Fatih Birol, told CNBC on Sunday that it’s a possibility — if not impossible — that a U.S. debt default could trigger a drop in oil demand and prices.

In a May 17 note, analysts at Swiss bank UBS cut their Brent price forecast by $10 to $95 a barrel by the end of the year due to higher-than-expected crude oil levels and recession fears. They expect almost 1.5 million barrels per day less supply to the market in June.

“As many OPEC+ member countries voluntarily remove barrels from the market and demand increases during the Northern Hemisphere summer, we expect large inventories to act and bring investors back into the oil market,” they said.

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Saudi Arabia’s oil minister on Tuesday stressed the risks of market uncertainty and the progressive depletion of spare capacity in producing countries – an argument he has previously advocated for more investment in fossil fuels.

“Look at where we are now: energy security is constrained, capacity is running out because countries are not investing in both oil and gas,” he said.

“We have a very fun path to where the demand is going to be. So if you’re a hedger, like us, we have to take action to pre-empt the possibility of further volatility (… ) but we take the challenge head on. , we continue Let’s join the challenge.”

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