Saudi Arabia has urged fellow oil producers to “keep our powder dry” in the face of lingering uncertainty over the pandemic, as the OPEC cartel and its allies discuss whether to launch a flood of gross on the market.
Prince Abdulaziz bin Salman, oil minister and son of King Salman, said on Thursday that while there was “no doubt” that the market had improved since January, he wanted “to urge caution and vigilance” .
“Before we take the next step forward, let’s be sure that the glow we see up front is not the beacon of an oncoming express train,” he said, as a meeting of petroleum ministers began.
“The right way to go now is to keep our powder dry and have contingencies in reserve to avoid any unintended results.”
Supply restrictions by Saudi Arabia-led OPEC, Russia and other countries had “sped up the rebalancing process” in the face of the oil collapse last year as the pandemic raged in China. around the world, said Prince Abdulaziz.
Record-breaking supply restrictions of nearly 10 million barrels per day agreed to last April, along with a more cautious approach to unwinding those cuts – to around 7 million barrels per day – have kept oil prices in check. these last months.
The Opec + group must not “jeopardize” this progress, he added.
Discussions on Thursday will largely revolve around whether producers should move forward with a collective 500,000 bpd increase in supplies from April. Saudi Arabia will also decide how and whether to roll out its own voluntary additional 1 million bpd reduction.
Brent rose 2 percent after the comments to $ 65.30 a barrel.
Travel bans and government lockdowns to tackle the spread of the coronavirus have drastically hit demand for oil last year and forced global producers to take collective action to raise prices.
Optimism about the rollout of vaccines around the world has helped crude prices climb back above $ 60 a barrel, but some ministers are reluctant to throw too much oil into the market.
Russia, Saudi Arabia’s key partner in the Opec + oil alliance, has sought to increase production at a faster rate than the kingdom wanted, anxious to cede market share to its rivals.
“The Russians definitely want more oil there,” said an OPEC delegate. “They held that position for a while.”
Alexander Novak, Russian Deputy Prime Minister, said that while the new strains of coronavirus presented great “uncertainty”, the oil market was “in much better shape” than in recent months.