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Saudi says Opec+ working against market ‘uncertainties’

REUTERS/Ahmed Yosri
Saudi Arabia's minister of energy Prince Abdulaziz bin Salman Al Saud speaks during 10th Arab-China Business Conference in Riyadh on June 11, 2023

Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said that the latest Opec+ agreement involved comprehensive reform while the alliance was working against “uncertainties and sentiment” in the market.

“That is why we had this agreement,” he said at the Arab-China business conference in Riyadh, when asked what was necessary to achieve market stability.

He said while the physical market was giving some signals, the futures market was saying the opposite, meaning the Opec+ alliance of producers had to “remain in a state of readiness”.

Saudi Arabia, Opec’s largest exporter, announced a voluntary cut of one million barrels per day (bpd) for July at an Opec+ meeting in Vienna last weekend.

The group of producers also lowered its collective production target for 2024 and the nine participating countries extended voluntary cuts announced in April to the end of 2024.

The UAE secured a higher output quota which it had long been seeking — an issue that had caused tension between the group and Abu Dhabi, which has been increasing its output capacity.

The prince said the new Opec+ deal would be rewarding for those who were investing to grow their production capacity.

“In the final analysis what this agreement will achieve for all of us is that those who invest, not this year, but the years to come, ’24 and ’25 and moving forward, there will be a recognition for their investment because they will be given higher production allocations.”

Concern about the global economy dampened the oil market’s reaction to Saudi Arabia’s pledge to cut supply. Oil prices fell by more than a dollar per barrel on Friday to record a second straight weekly decline.