Saudi energy minister Prince Abdulaziz bin Salman today again pushed back against calls for Opec and its non-Opec partners to raise their collective crude output more aggressively to help temper rising prices, and said the current energy crunch is not down to a shortage of crude.
"[Saudi Arabia] has been the guardian of energy security when it comes to oil. And in doing so, we have asked ourselves deliberately here what we can do as an additional contribution to mitigate the situation," Prince Abdulaziz told the India Energy Forum by CERAWeek.
"Unfortunately, for the first time, we see our role extremely limited… because the issue is not availability of crude," he said. "Even if we made the crude available in tons and tons, who is going to burn it? Where are the refineries that will convert it? And who is in need? Are they in need of crude? Or gas?"
Opec+ is three months into a deal to restore the production it took off the market last year in response to the Covid-19-induced collapse in demand. The plan envisages monthly rises of 400,000 b/d until April 2022, and then of 432,000 b/d every month until all the 9.7mn b/d it originally cut from the market is returned. At the group's most recent meeting it opted to stick to that plan in the face of calls, notable from the US, that it consider raising production more quickly. With front-month Ice Brent futures up further since the meeting, topping $86/bl briefly this week, the calls have grown.
India's petroleum minister Shri Hardeep Singh Puri, who was also speaking at the event, said prices need to "remain predictable stable and affordable" or the economic recovery "could be undermined".
"I am sure that when our friends who are in Opec… will factor in the sentiment that is being voiced," he said.
Scaremongering
Echoing comments he made in Moscow last week, Prince Abdulaziz today said the current situation is an anomaly.
"A good chunk of the tightness today that we see is [down to] some sort of scaremongering," he said. "There is always this human thing, you know the crowding effect kicks in and panic buying picks up."
Oil prices are being supported by the ongoing shortage of gas and coal that has encouraged gas-to-oil switching in the power industry ahead of the northern hemisphere winter. The IEA has predicted that, if temperatures get exceptionally low, this switching could generate an additional 500,000 b/d of demand in the season.
Prince Abdulaziz said the incremental demand could amount to "500,000-600,000 b/d," but said this was not a foregone conclusion.
"I do respect weathermen but if you… check what the weatherman says and check the weather tomorrow… you would probably [question] how reliable they are," he said.
The Opec+ group will next meet on 4 November, when it will decide on policy for the following month.
