OPEC+ deal on Sunday saw countries agree to reduce collective output by 9.7 million barrels a day
Saudi Arabia is ready to cut oil production further if needed when the OPEC+ alliance meets again in June, the kingdom’s energy minister said.
“Flexibility and pragmatism will enable us to continue do more if we have to,” Prince Abdulaziz bin Salman told reporters on a conference call on Monday. “We have to watch what’s happening with demand destruction or demand improvement, depending on how things evolve.”
Saudi Arabia, Russia and other oil producers within the OPEC+ alliance sealed an historic deal on Sunday to reduce their collective output by 9.7 million barrels a day, about a 10th of global supply, in an effort to revive a market ravaged by the economic impact of the coronavirus pandemic.
“We are still dealing with uncertainty related with the virus and its impact,” Prince Abdulaziz said, speaking from Riyadh. “The will is there, and the structure is there.”
Saudi Arabia would only cut if others within the OPEC+ alliance reduced their production accordingly, the Prince said, reiterating a long-standing policy of the kingdom. But he cautioned that the more bearish forecasts for oil demand destruction may turn out too pessimistic, and therefore OPEC+ may not need to reduce output any further.
“There are too many jurors that are out,” he said. “This is a situation when every day the numbers change, you have to maintain being vigilant about how these things may progress.”
Prince Abdulaziz played down the market reaction to the OPEC+ agreement. Brent crude, the global oil benchmark, fell 0.6 percent in London to $31.30 a barrel. That weakness should be compared with the rally the previous week, as the market priced in a big production cut, he said.
“It’s the typical deal: Buy the rumour, sell the news,” the prince said.