Saudi Arabia’s energy minister says oil cuts not about ‘jacking up prices’

High-profile figures have predicted oil will soon break US$100 a barrel. Photo / 123RF

Saudi Arabia’s energy minister has defended the kingdom’s decision to extend oil production cuts, insisting the move was not about “jacking up prices” even as crude futures push towards US$100 a barrel.

Riyadh and Moscow earlier this month announced they would prolong cuts to production and exports to the end of the year. Brent crude, the international oil benchmark, has since increased more than 5 per cent and on Monday rose another 1 per cent to almost US$95 a barrel, a new 2023 high.

“It’s not about ... jacking up prices, it’s about making the decisions that are right when we have the data,” said energy minister Prince Abdulaziz bin Salman on Monday in his first public comments since the decision.

He insisted a global economic recovery that has fuelled a surge in oil demand was not certain.

“The jury’s still out about what will happen to Europe in terms of growth,” he told industry leaders gathered for the World Petroleum Congress in Calgary, Canada. “The jury’s still out about what the central bankers will do in terms of additional interest rates ... The jury’s still out about how the US economy will fare within the context of what’s happening globally.”

Many analysts expect that oil prices will continue to rise as the production cuts limit supply at a time of accelerating global demand. Mike Wirth, chief executive of US energy major Chevron, became the latest high-profile figure on Monday to predict that oil would soon break US$100 a barrel.

The International Energy Agency expects global oil consumption to average a new record of 101.8 million barrels a day this year, led by a surge in Chinese demand, and that the Saudi-Russia cuts will leave global oil markets in a “substantial deficit” for the remainder of the year.

Prince Abdulaziz, the half-brother of Saudi Crown Prince Mohammed bin Salman, also hit out at the IEA, escalating a war of words with the agency, as he said it should be “ashamed” of some of its previous comments criticising the Opec+ cartel led by Saudi Arabia and Russia over reductions in supply.

“None of the things that they were warning about — and maybe anytime that they forecast — were as accurate as one would have hoped,” he added. “They have moved now from being a forecaster and assessors of the market to one of creating political advocacy.”

He said that the kingdom could adjust the cuts as necessary, but “we should be cautious about these things”.

“It is not our wish to see the situation as it is today because it is not bad yet,” the minister said.

Rising prices have increased pressure on US President Joe Biden as he seeks re-election next year. Washington has been hesitant to publicly criticise Riyadh over the cuts as it pursues a deal to “normalise” relations between Saudi Arabia and Israel.

Bin Salman’s comments come during a week when a high-level delegation from the kingdom is visiting New York for the UN General Assembly.

Written by: Myles McCormick.

© Financial Times