OPEC+ to Stick to Production Cut, Saudi Minister Tells Energy Intelligence

OIL PRICE - CAIRO. Saudi Arabia’s energy minister Prince Abdulaziz bin Salman told Energy Intelligence in an interview on Tuesday the OPEC+ alliance will stick until the end of the year to production cuts agreed in October.

“There are those who continue to think we would adjust the agreement ... I say they need to wait until Friday Dec 29 2023 to demonstrate to them our commitment to the current agreement.”

Prince Abdulaziz also said the U.S. Senate's proposed NOPEC bill was a different concept from price caps that have been imposed by Western countries on Moscow over the invasion of Ukraine, yet they had similar potential impacts on the oil market.

Last week, U.S. senators from both political parties reintroduced the so-called No Oil Producing and Exporting Cartels, or NOPEC, bill. If passed it would change U.S. antitrust law to revoke the sovereign immunity that has protected members of the OPEC+ alliance and their national oil companies from lawsuits over price collusion.

There have been several attempts to pass the NOPEC bill over more than two decades.

"The NOPEC bill does not recognize the importance of holding spare capacity and the consequences of not holding spare capacity on market stability,” he said.

The NOPEC bill would undermine investments in oil capacity and cause global supply to fall, he said and any price caps would have a similar effect.

The prince said price caps whether imposed on a country or a group of countries would lead to "individual or collective counter-responses with intolerable consequences in the form of massive volatility and instability."

“If a price cap were to be imposed on Saudi oil exports, we will not sell oil to any country that imposes a price cap on our supply and we will reduce oil production and I would not be surprised if others do the same."

The Group of Seven Countries, the European Union and Australia implemented the price cap on seaborne cargoes of Russian oil on Dec. 5, setting it at $60 a barrel. Russia has said it would cut 500,000 barrels per day (bpd) of supply from March.

Prince Abdulaziz also said global demand growth would outpace current global spare capacity while emergency reserves were at a historic low. "That is why it is crucial that policies are put in place to support investments needed to increase spare capacity in a timely manner and that global emergency stocks are maintained at an adequate and comfortable level."

Despite forecasts for global economic growth, the prince said uncertainty remained on the demand recovery outlook as China opens up after strict zero Covid policies. Another wild card was how aggressively central banks would hike rates to tame inflation, he said.