“I will not abandon the precautionary approach” to oil production

The influential alliance of oil producers led by Saudi Arabia and Russia is preemptively prepared to wait months for guidance from “real numbers” before adjusting policies amid price fluctuations in the crude oil market, the Saudi energy minister said on Sunday.

Prince Abdulaziz bin Salman said: Yes, we may be late in making a decision on what to do, but I will not abandon the precautionary approach, even if it exceeds a month or two, or three or four months, or five months. CNBC’s Dan Murphy on the sidelines of MENA Climate Week in Riyadh.

The Organization of the Petroleum Exporting Countries, which Riyadh chairs, and its non-OPEC allies, known together as OPEC+, agreed last October and have since backed a decision to withdraw 2 million barrels per day of production from the oil market. Since then, some OPEC+ members have implemented additional voluntary cuts outside the group’s decisions, with a cut of around 1.66 million barrels per day extending to the end of 2024, and with Saudi Arabia and Russia respectively reducing their supplies by an additional million. barrels per day and 300 thousand barrels per day until the end of this year.

The OPEC+ technical committee, the Joint Ministerial Monitoring Committee, convened in October. 4 To review market fundamentals and each country’s compliance with production commitments. Its assembly concluded without calling for an emergency ministerial meeting to amend the output strategy.

Asked whether the group might need to consider more coordinated production measures to maintain market stability at the beginning of 2024, Prince Abdulaziz said: “We hope not to do that,” but stressed: “Never ignore what you can do.” OPEC+ for oil.” The purpose of attending this market.”

The recent supply crunch and demand recovery initially pushed prices near $95 per barrel, but they have recently retreated again due to macroeconomic concerns stimulated by the high interest rate environment. Oil prices have been a major contributor to global inflation since Moscow’s large-scale invasion of Ukraine, especially in Europe and the G7 countries, where consumers have lost access to sanctioned Russian barrels.

Adding to the pressure on prices, the Paris-based international energy watchdog forecast last month that demand for oil, gas and coal would peak by 2030 — drawing vocal objections from OPEC, whose officials have repeatedly and controversially called for simultaneous investment in fossil fuels. and renewable supplies. In order to avoid short-term energy shortage.

Prince Abdulaziz stressed on Sunday: “We want to show the world that we will use every source of energy,” noting that the Kingdom is “very serious in dealing with the issue of climate change. We are not the naysayers.” In fact, we are convinced that science says it exists and we should care about it.”

The commitment of OPEC+ countries to the energy transition – including the group’s member UAE, which will host the COP28 conference starting in late November – has come under heavy criticism due to high carbon emissions resulting from the production and consumption of fossil fuels.

Observers are watching the market open to see which way oil futures prices will turn, two days after renewed unrest in the Middle East, where the Palestinian militant group Hamas launched a deadly and decisive attack against Israel that claimed the lives of at least 600 Israelis at the time of the attack. writing According to official Israeli communications. Hostilities occurred after Pentecost^y Anniversary of the Fourth Arab-Israeli War. Of particular importance to crude oil markets, the 1973 attack led to a global energy crisis, as a result of the embargo imposed on the United States by oil-producing Arab countries led by Saudi Arabia – which supports the Palestinian cause – for its support of Israel.

The latest conflict erupted at a high-stakes point in Middle East diplomacy, months after the United States pushed doggedly for the normalization of relations between Israel and Saudi Arabia — which earlier this year resumed ties with arch-rival Iran, a historic backer of Hamas. . .

In response to a question about whether OPEC+ has the necessary toolkit to address the recent escalation between Israel and Hamas, Prince Abdulaziz deferred comment to the Saudi Foreign Ministry, but stressed that the alliance of oil producers “dealt with the ups and we dealt with the declines” in global production. Challenges, including the COVID-19 pandemic.

“I honestly think the best I can say is that the cohesion of OPEC+ should not be challenged. We have been through the worst, and I don’t think we will have to go through any terrible situation at all,” he added. . .