Saudi Energy Minister Prince Abdulaziz bin Salman suggested that the oil production cuts approved by the OPEC+ alliance would continue after the first quarter of next year if necessary, and pledged to implement the cuts in full according to the agreement concluded last Thursday. In market transactions – today, Tuesday – crude oil sales maintained their prices almost unchanged.
The minister said – in an interview with Bloomberg Agency – that the supply cuts announced last week by “OPEC Plus” by 2.2 million barrels per day, about half of which come from Saudi Arabia, will not be withdrawn except after considering market conditions and using a “gradual approach.” .
The cuts include extending the current Saudi and Russian voluntary cuts of 1.3 million barrels per day, which means that the additional cuts are about 900 thousand barrels. The new cuts come in addition to the previous ones that were announced in various steps since late 2022.
The Saudi Energy Minister added that although Russia may not reduce its production, it is implementing its restrictions on exports. If Moscow fails to fulfill its pledges, as it did earlier this year, it has been transparent and promised compensation.
It is noteworthy that “OPEC Plus” is an alliance consisting of the Organization of the Petroleum Exporting Countries (OPEC) and allies outside it, most notably Russia.
Price stability
In early trading today, oil prices witnessed little change, as Brent crude futures fell one cent to $78.02 per barrel, while US West Texas Intermediate crude futures rose 5 cents to $73.09.
Kelvin Wong, chief market analyst for the Asia-Pacific region, said that the statement of the Saudi Energy Minister – that OPEC Plus production cuts could continue after the first quarter of 2024 if necessary – provided some support to the market.
Tina Ting, an analyst at CMC Markets, said that oil prices fell in the previous trading session as traders doubted that the supply cuts from OPEC Plus would have a significant impact, and with the impact of the rise in the dollar on commodity prices in general.
A stronger dollar usually makes oil more expensive for holders of other currencies, which may weaken demand for oil.
But the resumption of the Israeli aggression on Gaza raised concerns about supplies, as did the attacks by the Yemeni Houthi group on 3 commercial ships in international waters south of the Red Sea.
This came in the wake of a series of attacks in the waters of the Middle East region following the outbreak of the Israeli aggression against Gaza on October 7, in response to the “Al-Aqsa Flood” operation launched by the Palestinian resistance, led by the Izz al-Din al-Qassam Brigades, against the occupation.
Data on Tuesday showed that US factory orders fell more than analysts expected in October, the highest decline in more than three years, which put pressure on sentiment in the oil market. Analysts said this reinforced the view that high interest rates were starting to limit spending.
