Saudi Arabia reassured oil markets on Monday that the oil policy of OPEC's largest producer and de facto leader wouldn't change radically under its new energy minister, who also appeared to signal that further cuts could address the global glut.
According to AFP, Saudi Arabia's newly appointed Energy Minister, Prince Abdulaziz bin Salman-the first royal to hold the oil minister's post in the Kingdom-said at an energy conference in Abu Dhabi on Monday:
"Cutting output will benefit all members of OPEC."
The Joint Ministerial Monitoring Committee (JMMC) of the OPEC and non-OPEC countries part of the deal meets in Abu Dhabi later this week to take stock of the oil market, and it could discuss further cuts.
Suhail Al Mazrouei, the energy minister of the United Arab Emirates (UAE), told Khaleej Times that "Anything that the group sees that will balance the market, we are committed to discuss it and hopefully go and do whatever necessary."
However, the minister added a note of caution, saying "But I wouldn't suggest to jump to cuts every time that we have an issue on trade tensions."
OPEC and its allies in the production cut pact have managed to put a floor under oil prices, but they have so far failed to prop the price of oil to a level that would balance most of OPEC members' budgets. Trade tensions and fears of global economic slowdown have made oil market participants pessimistic about global oil demand growth this year. Rising non-OPEC production, particularly from the United States, is also offsetting part of the OPEC+ coalition's cuts, and some analysts believe that deeper cuts may be necessary.
With market sentiment pessimistic about oil demand growth and with rising U.S. crude oil production, Saudi Arabia needs to take action sooner rather than later to support oil prices at least around US$60 a barrel Brent, IHS Markit said at the end of August.
Earlier in August, Emma Richards, senior industry analyst at Fitch Solutions, said that in the current gloomy market sentiment, OPEC would need to deepen the production cuts by 1 million bpd if the cartel wants to move up the price of oil.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More