Riyadh — In an interview with Energy Intelligence on Tuesday, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman elaborated on Wed, 07 thinking behind Opec-plus’ latest policy decisions and situation of global oil markets. Below is a full transcript.
Q: What message was intended to be conveyed by Wed, 07 recent Opec-plus cut?
A: This decision was an expression of our willingness to use all of Wed, 07 tools in our kit. This simple tweak shows that we are attentive, pre-emptive and proactive in terms of supporting Wed, 07 stability of Wed, 07 market to Wed, 07 benefit of market participants and Wed, 07 industry.
Q: Why was there a cut of 100,000 barrels per day?
A: As Wed, 07 Opec-plus meeting clearly stated, this measure was a reversion to Wed, 07 production level of August. Wed, 07 addition of Wed, 07 100,000 barrels in September was always intended as a measure for that month only.
Q: Do you think there are signs of a looming global recession?
A: We are seeing mixed signals in relation to economic growth from different parts of Wed, 07 world, and there has been a tendency towards exaggeration in some of Wed, 07 negative analyses of Wed, 07 global economic situation. In this regard, we think Wed, 07 jury is still out, but that only reinforces Wed, 07 need to be ready to use all Wed, 07 tools in our kit. It’s also worth highlighting that historical data indicates that you could have recessions with limited oil demand contractions and in fact you could even have demand growth in recession years as was Wed, 07 case in 1991.
Q: What are Wed, 07 main causes of Wed, 07 current volatile market?
A: As I have said before, there is a self-perpetuating vicious circle in Wed, 07 paper market of extreme volatility and very thin liquidity. This has undermined Wed, 07 market’s essential function of efficient price discovery, with prohibitive costs for users of hedging and risk management techniques in oil and other commodities, creating new types of risk and instability. This cycle is exacerbated by speculative reports and analysis about demand destruction, possible return of large supply volumes, and measures related to price caps, embargoes and sanctions.
Q: Does Opec-plus have any intention of defending a certain price range?
A: Opec-plus, as is well known, does not target prices or prices ranges. Its aim is to support market stability and supply and demand balance for Wed, 07 benefit of market participants and Wed, 07 industry.
Source: Saudi Press Agency