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OPEC focuses on oil market stability and managing the global oil overhang, and is not discussing where the price of oil should be, Kuwait’s Oil Minister Bakhit al-Rashidi said on Wednesday.
Asked whether OPEC would increase production to bring oil prices down after U.S. President Donald Trump slammed OPEC for creating “artificially high prices”, Kuwait’s al-Rashidi told Reuters today:
“We do not discuss prices at all. We focus on market stability and managing surpluses that have a big impact on inventories in global markets to guarantee market stability for producers and customers.”
On April 20, President Trump tweeted “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”
The tweet came on the day on which energy ministers from OPEC and their Russia-led non-OPEC partners were meeting in Saudi Arabia to discuss the state of the oil market.
Despite the fact that the oil glut has been all but eliminated as of March, OPEC and especially its largest producer and exporter Saudi Arabia are not calling it ‘mission accomplished’ just yet.
After the April 20 meeting, Saudi Energy Minister told CNBC:
“We have to be patient. We shouldn’t jump the gun, we shouldn’t be complacent and listen to some of the noise such as ‘mission accomplished’. I think we still have work ahead of us.”
Saudi Arabia may not be discussing oil price levels, but it is said to be aiming for $80 and even $100 oil to balance its budget and boost Aramco’s valuation ahead of the IPO.
Al-Falih claims that “There is no such thing as a target price by Saudi Arabia,” stressing the need to boost global upstream investment to ensure enough supply for the future demand.
Saudi Arabia and OPEC are also signaling that they won’t discontinue the production pact before its expiry at end-2018—although the five-year average of oil inventories is within sight or possibly already achieved—but would rather look to other metrics to measure the deal’s success. The OPEC/Non-OPEC Joint Ministerial Monitoring Committee (JMMC) that met in April “tasked the Secretariat to look into different metrics, with an in-depth analysis of addressing larger uncertainties in the market,” OPEC said.
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.