Saudi Arabia urged fellow members of the OPEC+ oil alliance to remain cautious as they prepare to consider further output increases.
Crude prices have rebounded to a one-year high above $60 a barrel in New York as fuel demand recovers and the 23-nation OPEC+ coalition constricts supply. Still, the ongoing pandemic poses a continuing threat to consumption, and oil-output losses in the U.S. caused by freezing storms are unlikely to last.
The alliance led by the Saudis and fellow oil titan Russia will gather in early March to decide whether they can revive some more of the production halted during the coronavirus crisis.
The group is currently withholding just over 7 million barrels a day — or about 7% of world supplies — and is committed to restoring about 1.5 million barrels in stages over the course of this year, depending on market conditions.
Riyadh and Moscow have differed on how quickly to revive the halted output, with Russia generally more keen to resume production quickly.
When the alliance gathered last month, the Saudis doubled down on the strategy of output restraint by making an extra 1 million-barrel-a-day cutback that would apply in February and March. Their move has paid off, helping to drive the recovery in prices.
For oil importers, there are growing signs that the strengthening market is becoming a problem. Dharmendra Pradhan, energy minister of India — one of the biggest buyers of OPEC’s crude — said at the same conference that higher prices were also harming the global economic recovery.
Prince Abdulaziz’s warning indicates that another debate could ensue when the Organization of Petroleum Exporting Countries and its allies meet again on March 4.
Iraq, another OPEC+ member that’s often eager to open the taps, said last week that the group may choose to keep production steady at the forthcoming gathering.
Russia and the United Arab Emirates, which have pressed for increases at recent meetings, have yet to make their preferences known.
For Riyadh, however, the comments on Wednesday from the prince suggest it prefers to keep a lid on supply.
“The football match is still being played, and it’s too early to celebrate and declare any victory against the virus,” Prince Abdulaziz said. “The referee is yet to blow the final whistle.”
— With assistance by Javier Blas – Bloomberg
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat.
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