Arab News, Tuesday, Jan 5, 2021 | Jamadi Al Awwal 21, 1442
Saudi Arabia urges caution in uncertain global oil markets
Saudi Arabia: Saudi Arabia has urged its fellow participants
in OPEC+ to observe “caution and responsibility” in oil market policy as several
countries go back into pandemic lockdowns, hitting demand prospects at the start
of the year.
Prince Abdul Aziz bin Salman, the Kingdom’s energy minister, told ministers at
the first of a new series of monthly OPEC+ meetings that “the level of
uncertainty in the world remains high.”
He said: “The new variant of the disease is a worrying and unpredictable
development. In many parts of the world, where infection rates have increased
worryingly, a new wave of lockdowns and restrictions are being put in place,
which will inevitably impact the rate of economic recovery in those countries.
“So I urge you today not to take for granted the progress we have made as a
group over the past year. Do not put at risk all that we have achieved for the
sake of an instant, but illusory, benefit,” he added.
The meeting was considering whether or not to follow an increase in OPEC+ supply
of 500,000 barrels this month with a similar rise in February. Some oil
exporters had argued that the recent rise in oil prices allowed for some leeway
to increase supply.
Brent Crude, the global benchmark, stood at $52.47 a barrel as the Prince was
speaking, near its highest level since March before the pandemic ravaged global
energy demand.
Under the terms of the historic deal last April, which cut supply by the biggest
amount in history, producers were due to implement an increase of 2 million
barrels per day from the start of 2021, but — largely on Saudi urging — OPEC+
held off lifting by the full amount, instead opting to examine market conditions
on a monthly basis.
“Our collaborative approach has helped us go a long way towards rebalancing
global oil markets after the shocks of last year. But now, as we see light at
the end of the tunnel, we must — at all costs — avoid the temptation to slacken
off our resolve,” the Prince said.
Saudi caution was reinforced by Mohammad Barkindo, secretary general of the
Organization of Petroleum Exporting Countries (OPEC), who said that the outlook
for oil demand in 2021 was “very mixed,” and that there were “still very many
downside risks to juggle.”
Prince Abdul Aziz echoed this uncertain forecast. “Global oil demand is still
well short of where it was at the beginning of the year. Demand for transport
fuels, in particular aviation fuel, is especially fragile.”
OPEC+ has the option of maintaining current levels of production for another
month, as well as increasing or decreasing output.
“As we agreed at the last meeting, we must retain the flexibility to respond to
events as they occur and make the necessary adjustments to attend to market
needs. We should make every effort to achieve both full compliance and full
compensation,” he added.