Saudi Arabia’s oil chief says he’ll stay cautious on output

Saudi Arabia’s energy minister reiterated that the kingdom will remain cautious about raising oil production, even as several prominent analysts say rising demand will soon cause prices to rise beyond $100 a barrel.

“I will believe it when I see it and then take action,” Prince Abdulaziz bin Salman said on Saturday in Riyadh.

The minister, speaking to energy historian Daniel Yergin, said OPEC+ had been proved correct with its decision in October to cut output by 2 million barrels a day. The move triggered a fallout with the US, which said the world economy needed higher crude supplies, though tensions have since eased.

“If people had trusted us then, we wouldn’t have undergone the trepidations that happened,” he said, referring to a spike in prices after OPEC+ — a 23-nation group led by Saudi Arabia and Russia — announced its move.

The alliance’s market-monitoring committee met on Wednesday and recommended keeping crude production steady amid uncertainty over the strength of China’s economic rebound and the volume of Russian exports as Western nations tighten sanctions on Moscow.

Brent soared to around $130 a barrel after Russia’s invasion of Ukraine last February. It’s since slumped below $80 a barrel, with rising interest rates and a strong dollar causing an economic slowdown.

Yet the oil market remains tight. Goldman Sachs Group Inc., citing low stockpiles and spare capacity among producers, sees Brent rising back above $100 a barrel in the third quarter. Morgan Stanley has a similar forecast.

Sanctions Fear

The prince warned that sanctions against energy producers will backfire if and when demand does pick up quickly.

“All these sanctions, embargoes, they all will convolute into one thing and one thing only: lack of energy supplies of all kinds when they’re most needed,” he said. “That is my worry.”

Saudi Arabia has continued to work closely with Russia on OPEC+ matters since the invasion. Crown Prince Mohammed bin Salman spoke to Russian President Vladimir Putin two days before Wednesday’s meeting.