Saudi Energy Minister Prince Abdulaziz bin Salman said, on Tuesday, that “a ceiling on oil prices will inevitably lead to market instability.”
The Saudi energy minister added, “We will not sell oil to any country that imposes a price ceiling on our supplies.”
In an interview with Energy Intelligence, the Minister of Energy affirmed the determination to maintain the OPEC + agreement to reduce production until the end of the year, according to the Saudi Press Agency (SPA).
He said, “There are many factors that affect market trends, and it is estimated that the global economy will continue to grow this year and next, but there is still uncertainty about the pace of growth. In addition, China has recently begun the recovery phase after prolonged closures following Corona virus pandemic, but the period required for recovery is still unclear. Economic recovery is causing inflationary pressures, and this may prompt central banks to intensify their efforts to control inflation. The interplay between these and other factors limits clarity, and the only reasonable action that can be taken in such an environment What is fraught with uncertainty is to keep the agreement that we made last October for the rest of this year, and that is what we intend to do, as we must make sure that the positive indicators are sustainable.”
Regarding the re-introduction of the NOPEC bill, Prince Abdulaziz said, “There is a big difference between the NOPEC bill and the expansion of imposing a price ceiling, but their potential impact on the oil market is similar, as such policies add new risks and greater ambiguity at a time when clarity and stability are most needed.” And I must reaffirm my point of view that I stated in August and September, when I emphasized that such policies will inevitably exacerbate market instability and volatility and this will negatively affect the petroleum industry. On the other hand, OPEC Plus has done its best and succeeded in achieving high stability and transparency. in the oil market, especially compared to all other commodity markets.
The NOPEC draft law does not take into account the importance of having a reserve of productive capacity and the consequences of not having this reserve on the oil market, and the NOPEC draft law weakens investments in oil production capacity, and it will also cause global supply to fall sharply below demand in the future, and the impact of this will be tangible all over the world. , in producing and consuming countries, as well as in the petroleum industry, according to the Saudi Energy Minister.
This also applies to the price ceiling, whether it is imposed on a country or a group of countries, and on oil or any other commodity, as it will lead to an adverse reaction individually or collectively with unacceptable repercussions represented by large fluctuations and instability in the markets. Therefore, if it is imposed A price ceiling on Saudi oil exports, we will not sell oil to any country that imposes a price ceiling on our supplies, and we will reduce oil production, and I will not be surprised if other countries take the same measure.
He explained that the reserve of production capacity and global emergency stocks constitute a basic safety net for the oil market in the face of potential shocks. It has repeatedly warned that global demand growth will outpace the current level of global productive capacity reserves, at a time when emergency reserves are at an all-time low, which is why it is important to implement policies that support the investments required to increase production capacity in a timely manner, and to maintain Levels of global emergency stocks to be sufficient and appropriate.
He said, “We have embarked in the Kingdom of Saudi Arabia proactively to expand our production capacity to reach 13.3 million barrels per day by 2027, and work on this expansion is now in the engineering stage, and it is expected that the first increase of this expansion will enter into force in 2025.” “.