Saudi Energy Minister: OPEC+ Targeting Volatility, not ‘Jacking Up Prices’

CALGARY, Alberta — Saudi Arabia’s minster of energy, Prince Abdulaziz bin Salman Al Saud, said he views OPEC+ as no different than central banks in regulating oil markets, with oil quotes meant to provide stability rather than “jacking up prices.”

“We're not targeting prices. We’re targeting less volatility, more [sustainable] markets, more predictable markets,” he said. “I think we're doing ourselves a favor. We're doing [the world] favor.”

Earlier this month, Saudi Arabia announced that its voluntary 1 MMbbl/d cut in oil production would be extended through the end of the year, rather than subject to monthly review.

Abdulaziz, speaking at the World Petroleum Congress, said he views OPEC+’s efforts as no different from that of the Federal Reserve or other government banks adjusting interest rates.

“I still believe that OPEC’s conduct is nothing different than what a central banker and group of central banks are doing,” he said. “So it first of all has a benign type of dedication. Second, it aspires to illuminate what regulators are doing. Three, it is my personal experience … that energy markets need regulating. International energy markets need regulators and regulating and it has to be a light handed regulation.”

But Abdulaziz said OPEC is not engaged in the “failed experiences of the past” —attempting to manage prices and quantities. “We are not the ‘70s OPEC,” he said.

OPEC+ and Saudi Arabia are instead responding to what is happening in the markets now because “we really don’t know what will be happening in the next few months.”

Global events in 2022, such as Russia’s invasion of Ukraine, have since been “exacerbated by so many different sources of anomalies, of uncertainties, which makes it extremely difficult” to make accurate forecasts, he said.

Covering a host of energy topics, including carbon capture and sequestration, the kingdom’s move toward hydrogen and electrification, Abdulaziz said an all of the above approach, including oil, natural gas, coal and renewables is needed to meet energy demand.

The quotas set by OPEC+ are a “pillar for energy security” in which sustainable and stable energy markets that allow for “the visibility required for investors to invest.”

Clear policies require a mindfulness about “what it takes to deliver energy in terms of the size of the investments required,” he said.

“We should be cognizant that we still need a thriving global economy, prosperous economy and growing economy,” he said.

OPEC+’s actions have been proactive, preemptive and precautionary, he said.

“These three words were created to address how we are trying to attend to the situation. …Knowing the fact that … the uncertainties are coming from multifaceted forces,” he said.

Abdulaziz noted forecasters have made assumptions based on inflation in the U.S., recessionary forces in Europe and the impression that China’s economy would “come back and come back fast and furious.” He suggested the reverse had occurred.

Abdulaziz took aim at forecasts in August and September of last year that OPEC+ had disregarded. He singled out the International Energy Agency, which he said OPEC+ had discarded as a source of predictive information and data as it has transitioned into the role of “political advocacy.”

Abdulaziz seemed to bristle at previous comments suggesting that production quotas were a “belligerent act of OPEC+.”

“If I was the IEA I would probably be very ashamed of what they have said during that month because none of the things that they were warning about has happened,” he said.

“It's always better to go by my motto, which is I will believe it when I see it,” he added. “Keep your astuteness, keep your calmness. It's only a matter of a month or two when reality comes.”