By Adedapo Adesanya
The Saudi energy minister, Prince Abdulaziz bin Salman, has said that despite heavy criticism of the recent decision by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to cut oil output, the cartel’s market predictions have been more accurate than others.
Speaking with the Saudi state news agency (SPA), he said OPEC+ predictions had been spot on because they have been based on fundamentals rather than politics.
“As I have emphasized multiple times, in OPEC+, we leave politics out of our decision-making process, out of our assessments and forecasting, and we focus solely on market fundamentals. This enables us to assess situations in a more objective manner and with much more clarity and this, in turn, enhances our credibility,” Saudi Energy Minister Prince Abdulaziz bin Salman told the media.
He said a perfect example was the oil price prediction environment surrounding the early days of Russia’s invasion of Ukraine in February of this year.
“At the start of the Ukraine crisis, some predicted large supply losses of more than 3 million barrels per d which caused panic and contributed to extreme volatilities,” the Saudi prince said, noting accusations were flying that OPEC+ was not responding appropriately to the crisis, “these projected losses did not materialise,” he quipped.
The minister also argued that in October, when OPEC+ decided to cut oil output, the move was described as highly risky, and suggestions were that politics had driven it. Panic mongers, the prince suggested, sounded alarm bells that the decision would “tip the global economy into recession and cause harm to developing countries.”
“Again, in retrospect, the OPEC+ decision turned out to be the right one for supporting the stability of the market and the industry,” the Saudi energy minister told SPA.
Oil prices hit an all-time high of $147 per barrel in March, right after Russia invaded Ukraine, but the rest of the year has seen Brent and WTI pare most of those gains, with the benchmarks trading around $75 to $80 per barrel.
