Saudi Arabia’s new energy minister Prince Abdulaziz bin Salman said there would be no paradigm shifts in the kingdom's policy following his appointment and dismissed concerns about slowing demand saying oil markets were driven by a spate of negative news.
"It’s not about demand rising or not rising. The market is now driven by negative sentiment emanating from negative news. I don’t believe demand has been impacted,” Prince Abdulaziz told reporters in Abu Dhabi on Monday on the sidelines of the World Energy Congress.
Oil prices edged up on Monday bolstered by news of his appointment and US Federal Reserve chairman Jerome Powell brushing off recession fears the previous day indicating additional interest rate cuts may be forthcoming.
Brent gained 0.5 per cent and was trading at $61.85 and West Texas Intermediate oil was up 0.6 per cent at $56.86 at 3:00pm UAE time. A brother of Saudi Crown Prince Mohammed bin Salman, Prince Abdulaziz took the oath of office on Sunday, replacing industry veteran Khalid Al Falih. Saudi Arabia's energy policy is expected to remain the same under the new minister.
“There is nothing radical in Saudi Arabia. We all work for the government. One person comes, one person goes,” Prince Abdulaziz told reporters a day after his appointment. “I think fundamentally Saudi Arabia’s energy policy is resting on [a] few pillars. The pillars don’t change.”
The US-China trade war has depressed oil prices by $15 a barrel, Bloomberg reported citing Energy Aspects. Opec members will meet with Russia and other countries this week in Abu Dhabi to review their production strategy against the backdrop of escalating tensions between the world's two largest economies.
However Prince Abdulaziz remained unfazed by market concerns over the possibility of a global recession draining further demand as well as escalating trade tensions between the US and China, the world's largest producer and importer of oil respectively.
"Do you have a recession today? No. They are projecting a recession subject to a possible trade war. Where is it? Do you really believe [the] US and China and those other countries involved would not have the wisdom and sensibility to try to overcome these issues without impacting the [global] economy in a most drastic way?" he told reporters.
Organisations such as the International Energy Agency have said global demand growth would be slower than expected for the second half of the year, because of mounting concerns over trade tensions between the US and China, the world’s biggest buyer of oil.
The IEA expects demand growth for crude to reach 1.1 million bpd in 2019 and 1.3 million bpd in 2020, a reduction of 100,000 bpd for this year and 50,000 bpd for the next.
Prince Abdulaziz dismissed the IEA's projections of slowing global demand. "If I should be concerned with IEA projections, I should probably be on Prozac all the time," he said.
Separately Opec member Iraq, which has consistently produced above its quota, is committed to oil production curbs, with output from the south having been slashed by 150,000 bpd, according Iraq oil minister Thamir Ghadhban, who also serves as the country’s deputy prime minister.
“We are definitely committed to respecting (the curbs),” he told reporters, adding that Iraq’s current production stood at 4.6 million barrels per day. It was too early to talk about deepening cuts, he added.
Oman's energy minister Mohammed bin Hamad Al Rumhy said it is premature to determine if oil markets required deeper supply cuts next year. Muscat is not a member of Opec, but is part of the pact to cut production.
"It is too early to assess," he said according to Reuters. On Sunday the UAE energy minister Suhail Al Mazrouei said Opec+ is not “limited to anything” when it comes to balancing oil markets.
"We don’t take decisions based on feelings. There are other concerns that are outside the supply and demand affecting us,” Mr Al Mazrouei told reporters. "I don’t think we’re limited to anything. Anything that the group sees as balancing the market, we’ll go and do. We won’t jump to cuts just on the basis of trade tensions.”
Opec+, the alliance led by Saudi Arabia and Russia, will meet in Abu Dhabi on Thursday to review compliance with a pact to cut 1.2 million barrels per day of production. The agreement, which has been in place since January, is expected to hold until March.
