OPEC+ defends decision amid oil volatility

OPEC+ ministers stood firm against oil’s bearish reaction to their decision to gradually increase crude production from October, asserting that the market will eventually recognise the correctness of the group’s policy, Bloomberg reported.

“The alliance remains committed to the stability of the oil market and can react quickly to any changes,” said ministers from the group’s largest producers at the St Petersburg International Economic Forum in Russia.

Saudi Energy Minister Prince Abdulaziz bin Salman reaffirmed that Sunday’s agreement, akin to previous OPEC+ deals, allows for the option to halt or reverse production adjustments if deemed necessary.

He criticised some bank analysts and media for misinterpreting the OPEC+ accord, foreseeing that the market will soon align with the belief that OPEC+ made “the right move.” “People ask me over the phone: ‘Are you relaxed?’ I say: ‘Why not?’ I know that we did the best job, we are on hold of the matter,” Prince Abdulaziz remarked. “Give it a day or two, reality will fall in.”

The OPEC+ and its allies resolved on Sunday to gradually unwind approximately 2 million barrels a day of production cuts starting in October. However, crude prices have since declined over 3 per cent in London, slipping below $80 a barrel as analysts question the market’s capacity to absorb the surplus supply.

Speaking at the same St Petersburg event, United Arab Emirates Energy Minister Suhail Al Mazrouei and Russian Deputy Prime Minister Alexander Novak echoed their Saudi counterpart’s stance, aiming to dispel any uncertainties surrounding the OPEC+ agreement.

OPEC+ Secretary-General Haitham Al-Ghais expressed optimism about oil demand, noting its resilience and strength, citing a global consumption increase of 2.3 million barrels a day in the first quarter. In contrast, the International Energy Agency reported weaker-than-expected demand in the first three months of 2024, estimating growth at just 1.2 million barrels per day (bpd).