Saudi Arabia's oil policy is based purely on supply and demand, Crown Prince Mohammed bin Salman said Sept. 20, in an interview broadcast on Fox News.
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"We just watch supply, demand. If there is a shortage of supply, our role in OPEC+ is to fill the shortage. If there is oversupply our role is to measure that for stability of the market," he said, when asked about OPEC+ supply cuts benefiting Russia.
Saudi Arabia has faced criticism for sticking to its cooperation with Russia and introducing major cuts, at a time when Western countries have imposed wide-ranging sanctions in response to Russia's invasion of Ukraine. Production cuts have boosted prices, helping Russia to deal with sanctions, spiraling war costs and discounts on its crude.
The Crown Prince said that invading a country is really bad, but Saudi Arabia has a good relationship with both Russia and Ukraine. He pointed to cooperation with Iran continuing within OPEC, despite political tensions, as a further example of how supply and demand, rather than geopolitics, governs Saudi production policy.
Saudi Arabia is pursuing a policy of significant crude production cuts, despite expectations of a supply squeeze at the end of 2023 and a significant increase in oil prices in recent months. It is cutting alongside other OPEC+ producers, including Russia, the largest non-OPEC producer in the group.
OPEC's latest forecast is for global oil demand to outstrip supply by more than 3 million b/d in the fourth quarter of 2023. Oil prices have also seen a significant rise in recent months. OPEC+ producers have not yet indicated that these two factors require any adjustment to current quotas.
Saudi energy minister Prince Abdulaziz bin Salman said Sept. 18 that OPEC and its allies will continue to be "proactive, preemptive and precautious" in managing the market.
Oil prices have risen significantly since Saudi Arabia announced its latest voluntary cuts. Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $95.725/b on Sept. 20, up from $74.605/b at the start of June.
Saudi Arabia's production is now at a two-year low of 9 million b/d -- a level it expects to maintain until the end of 2023. S&P Global expects Saudi Arabia to maintain its 1 million b/d cut until the end of the year.
Russia is also curtailing production, with its latest pledge to cut 300,000 b/d of supply up to the end of 2023. Both countries have said that output plans will be reviewed on a monthly basis.
The next meeting of the committee that oversees the OPEC+ agreement is due to meet on Oct. 4 to discuss market conditions and production volumes. A full OPEC+ ministerial meeting is scheduled for Nov. 26. The deal also includes the option to hold extraordinary meetings if necessary.