The Saudi energy minister has called on his colleagues in OPEC+ to stay in agreement about production policies to ensure long-term market stability.
"We need to keep this consensus-building approach to be with us permanently because, without it, we will lose sight of our collective ambition," Prince Abdulaziz bin Salman said at the International Petroleum Technology Conference in Riyadh this weekend, as quoted by Bloomberg.
"Ask any producer of oil and gas today. If it were not for OPEC+ would they be the chairmen and the CEOs of today? And the answer: they would have vanished," bin Salman also said.
With regards to OPEC's consensus on production, it has been remarkably solid of late. This may well be due to the fact that most OPEC producers don't have the capacity to increase production as much as they agreed to under the OPEC+ plan to return to pre-pandemic levels of output. According to analysts, Saudi Arabia and the UAE are likely the only OPEC members that have the spare capacity to boost production considerably.
However, even a member such as Nigeria, which has been against strict production curbs and which has only recently managed to boost its production close to its OPEC+ quota, is not arguing about the path the cartel has taken.
This suggests that there is stronger unity among the group's members, which in turn suggests continued limits on supply additions even from producers that have the capacity to pump more. And this, ultimately, means higher prices for longer as the consensus on demand remains quite bullish.
Interestingly, some OPEC members do not seem to share the belief expressed by some commodity industry executives such as Vitol's Russell Hardy that the global oil market is dangerously undersupplied.
"We are on a journey to attend to the market by gradually increasing production, and we think that this plan is attending to the supply and demand," UAE energy minister Suhail Al-Mazrouei said at the International Petroleum Technology Conference. "I think our plan is working, and I don't think that the market is hugely under-supplied."
By Charles Kennedy for Oilprice.com
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