After oil prices booked in May their worst decline in six months amid fears that trade wars would slow down global economic and oil demand growth, the price of oil rose early on the first trading day of June on Monday after Saudi Arabia moved to assure the market that the Saudis and the larger OPEC+ group would do whatever it takes to bring supply and demand to balance.
As of 10:53 a.m. EDT on Monday, WTI Crude was up 0.62 percent at $53.83, while Brent Crude was trading up 0.03 percent at $62.01.
Three weeks before OPEC and its allies are set to discuss the fate of their production cut deal, Khalid al-Falih, the energy minister of OPEC's de facto leader Saudi Arabia, said that there is emerging consensus among OPEC+ that the group remains committed to balance the oil market by drawing down inventories.
"And I would like to reiterate my confidence, based on my discussions with several key producers, and on our track record, that we will do what is needed to sustain market stability beyond June," al-Falih told Arab News in an interview published on Monday.
"To me, that means drawing down inventories from their currently elevated levels," said the energy minister of the world's top oil exporter.
Al-Falih reiterated Saudi Arabia's commitment to "do whatever it takes" to restore global oil balance, but declined to say if the recent oil price plunge means that chances are now higher for OPEC and its allies to extend the current deal through the end of the year. Related: It's Adapt Or Die For U.S. Refiners
"First, we do not target specific prices. … Prices are determined by the dynamic interaction of multiple forces, some of which are not even fundamental - such as geopolitical headlines and financial speculation," al-Falih told Arab News, adding that the partners will review the market fundamentals at the end of June before deciding how to proceed with their oil supply management policies.
"Increasing trade friction and potential barriers would certainly have a negative impact on the global economy and oil demand growth," al-Falih said.
A few days ago, Russia's First Deputy Oil Minister Anton Siluanov said that Russia may join a proposed extension of the oil production cuts. The most important issue to consider is what the oil price gains would be from an extension as opposed to the potential loss of market share to U.S. producers, Siluanov told Reuters last week.
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
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