DUBAI: 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.
