The current OPEC+ agreement on oil output, according to Saudi Arabia’s energy minister Prince Abdulaziz bin Salman, will remain in place through the end of the year, he added, adding that he is still wary of projections for Chinese demand.
According to the minister, the oil group cannot increase output based solely on early signals, according to an interview with Energy Aspects.
Organization of Petroleum Exporting Countries (OPEC+), which consists of allies like Russia and OPEC members, decided to reduce oil production targets by 2 million barrels per day (bpd) through the end of 2023.
“We made an agreement in October, and it will stand for the remainder of the year. Period,” he said.
As a result of China relaxing COVID restrictions, OPEC increased its projection for the growth of the world’s oil demand in 2023 this week, but Prince Abdulaziz argued that more assurances were required.
“No matter what trends you are looking at, if you follow the cautious approach not only would you see the beginning of a positive trend to emerge but you need to make sure that these positive signals of this market can be sustained,” he said.
“Demand will increase as China’s economy opens up, but since we have all experienced cycles of openings and lockdowns, what guarantees can the rest of the world have that what we have all experienced, every country included, will not be repeated?”
Prince Abdulaziz added that it was still unclear how long the world’s monetary and fiscal tightening would last.
“The jury is still out on how much more inflation may come and how the central bankers will react to it given their mandate,” he said.
The prince blamed the Paris-based International Energy Agency (IEA) and its initial predictions for a 3 million barrel per day (bpd) fall in Russian production for the U.S. strategic petroleum reserve (last year’s SPR) releases.
“That is a decision that is not mine, I respect the decision,” he said, referring to the In order to lower oil prices that had risen as a result of Russia’s invasion of Ukraine, the U.S. administration sold oil from its reserves last year.
“Because of the screams and frights they had created about how much production Russia would lose, the IEA was to blame.”