‘OPEC+ keeps politics out of it’s decision-making process,’ Saudi energy minister affirms
Minister of Energy Prince Abdulaziz Bin Salman reaffirmed that OPEC+ keeps politics out of its decision-making process and its assessments and forecasting.
Speaking to Saudi Press Agency (SPA) in light of recent independent media reports that OPEC+ oil market analysis and forecasts have proven to be correct and more accurate of others, Prince Abdulaziz stressed that OPEC+ focus solely on market fundamentals.
“This enables us to assess situations in a more objective manner and with much more clarity and this in turn enhances our credibility,” he said.
“At the beginning of the Ukraine crisis, some predicted large supply losses of more than 3 million bpd which caused panic and contributed to extreme volatilities.”
He added: “At that time, many accused OPEC+ of being behind the curve and not responding to a crisis in a timely manner. But these projected losses did not materialize.”
Speaking about OPEC+ decision in October 2022 to cut oil output, Prince Abdulaziz said: “When OPEC+ took the decision to cut output, it was heavily criticized. OPEC+ decision was described as ‘very risky’, ‘unfortunate’, and there were suggestions that it was driven by political motivations and that the decision would tip the global economy into recession and would cause harm to developing countries.”
“Again, in retrospect, the OPEC+ decision turned out to be the right one for supporting the stability of the market and the industry.”
He stressed that politicizing OPEC+ statistics and forecasting agitates consumers and creates confusion in the market and gives rise to anomalies and misguided interpretations, all of which contribute to unnecessary volatility.
“OPEC+ has maintained its demand figures for 2021 while some others have grossly and consistently underestimated historical and current demand resulting in discrepancies often referred to as “the puzzle of the missing barrels”, and they were eventually forced to resolve these discrepancies in early 2022 by adjusting demand upwards.”
Prince Abdulaziz said he won’t be surprised if the issue of missing barrels reemerges in early 2023, keeping up with the same pattern of underestimating demand yet again in 2022.
“Playing politics with statistics and forecasting and not maintaining objectivity often tend to backfire and result in loss of credibility,” he added.
He confirmed that OPEC+ has no choice but to remain pro-active and pre-emptive. “It’s not an easy task especially that the market has the tendency to overreact to news in both directions and we have seen many ill-advised interventions in energy markets.”
Prince Abdulaziz stressed that OPEC+ can assess markets in an objective manner, its proactive approach and the cohesion within the Group put it in a better position to contribute to a more stable market.
“In the last few years, the market has been subject to some extreme shocks and if it were not for the proactive approach that OPEC+ adopted, these shocks would have created havoc in oil markets like what we saw in other energy markets even before the Ukrainian crisis,” he pointed out.
He said: “Without credibility, markets become more volatile and less attractive for all types of participants. The oil market is no different. As OPEC+, we will not hesitate in handling any market situation.”
“OPEC+ intends to maintain its credibility through objective and high-quality analysis and through keeping its focus on market fundamentals.”
“This enables us to assess situations in a more objective manner and with much more clarity and this in turn enhances our credibility,” he said.
“At the beginning of the Ukraine crisis, some predicted large supply losses of more than 3 million bpd which caused panic and contributed to extreme volatilities.”
He added: “At that time, many accused OPEC+ of being behind the curve and not responding to a crisis in a timely manner. But these projected losses did not materialize.”
Speaking about OPEC+ decision in October 2022 to cut oil output, Prince Abdulaziz said: “When OPEC+ took the decision to cut output, it was heavily criticized. OPEC+ decision was described as ‘very risky’, ‘unfortunate’, and there were suggestions that it was driven by political motivations and that the decision would tip the global economy into recession and would cause harm to developing countries.”
“Again, in retrospect, the OPEC+ decision turned out to be the right one for supporting the stability of the market and the industry.”
He stressed that politicizing OPEC+ statistics and forecasting agitates consumers and creates confusion in the market and gives rise to anomalies and misguided interpretations, all of which contribute to unnecessary volatility.
“OPEC+ has maintained its demand figures for 2021 while some others have grossly and consistently underestimated historical and current demand resulting in discrepancies often referred to as “the puzzle of the missing barrels”, and they were eventually forced to resolve these discrepancies in early 2022 by adjusting demand upwards.”
Prince Abdulaziz said he won’t be surprised if the issue of missing barrels reemerges in early 2023, keeping up with the same pattern of underestimating demand yet again in 2022.
“Playing politics with statistics and forecasting and not maintaining objectivity often tend to backfire and result in loss of credibility,” he added.
He confirmed that OPEC+ has no choice but to remain pro-active and pre-emptive. “It’s not an easy task especially that the market has the tendency to overreact to news in both directions and we have seen many ill-advised interventions in energy markets.”
Prince Abdulaziz stressed that OPEC+ can assess markets in an objective manner, its proactive approach and the cohesion within the Group put it in a better position to contribute to a more stable market.
“In the last few years, the market has been subject to some extreme shocks and if it were not for the proactive approach that OPEC+ adopted, these shocks would have created havoc in oil markets like what we saw in other energy markets even before the Ukrainian crisis,” he pointed out.
He said: “Without credibility, markets become more volatile and less attractive for all types of participants. The oil market is no different. As OPEC+, we will not hesitate in handling any market situation.”
“OPEC+ intends to maintain its credibility through objective and high-quality analysis and through keeping its focus on market fundamentals.”
