OPEC+ Will Remain Proactive and Pre-Emptive, Saudi Oil Minister Says

Grant Smith and Devika Krishna Kumar, Bloomberg News

Fuel storage tanks at a PT Pertamina facility at Tanjung Priok Port in Jakarta, Indonesia, on Monday, Dec. 5, 2022. Pertamina is looking to buy crude for the February arrival to its Cilacap refinery, according to a tender document seen by Bloomberg. Photographer: Dimas Ardian/Bloomberg , Bloomberg

(Bloomberg) --

OPEC and its allies have no choice but to remain proactive given the uncertainties that face the market, the Saudi Arabian oil minister said.

“The market has been subject to some extreme shocks and if it were not for the proactive approach and the pre-emptive steps that OPEC+ adopted, these shocks would have created havoc in oil markets,” Prince Abdulaziz bin Salman told the Saudi Press Agency in an interview published late on Tuesday.

Oil markets experienced a surge in volatility this year, driven mainly by Russia’s invasion of Ukraine. As crude skyrocketed into triple digits, many government leaders fretted over prices and demanded oil producers take measures to lower them.

In October, OPEC+ said it would cut production due to its expectations that the market would be oversupplied in the fourth quarter and into 2023. That move angered the US, though tensions have since eased.

“We leave politics out of our decision making process, out of our assessments and forecasting, and we focus solely on market fundamentals,” Prince Abdulaziz said.

Brent prices have slumped around 35% since early June to $80 a barrel because of growing concerns about a global economic slowdown.

“The signal they want to send to the market is that they stand ready to cut, if they need to,” Vandana Hari, founder of Vanda Insights, said to Bloomberg TV on Wednesday, referring to OPEC+ and the prince’s comments. “OPEC+ is really worried about declining demand next year leading the markets into over-supply again.”

The 23-nation alliance, led by the Saudis and Russia, may look to defend Brent prices at $70 a barrel, she said.

“Perhaps when prices reach those levels you can expect them to start talking again,” she said. “They’ll remain in wait-and-watch mode for the time being because there are huge uncertainties with regard to demand and China’s reopening.”

--With assistance from Yousef Gamal El-Din and Sarah Halls.

(Updates from sixth paragraph with oil prices, comments.)