Saudi Press
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Wednesday, Feb 01, 2023
The World in the Heart of the Kingdom
Saudi Arabia’s Energy Minister says OPEC+ leaves politics out of decisions
OPEC+ members leave politics out of the decision making process and out of their assessments and forecasting, Saudi energy minister Prince Abdulaziz bin Salman bin Abdulaziz said in an interview with the Saudi state news agency on Tuesday.
“As I have emphasized multiple times, in OPEC+ we leave politics out of our decision-making process, out of our assessments and forecasting, and we 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,” Prince Abdulaziz told SPA.
He used the Ukraine crisis as an example, saying that at its start “some predicted large supply losses of more than 3 million bpd which caused panic and contributed to extreme volatilities. 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.”
The minister also referenced the OPEC+ decision to cut output in October and how 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 said.
The minister criticized politicizing statistics and forecasting and using them to discredit OPEC+ and its stabilizing role, saying it “agitates consumers and creates confusion in the market and gives rise to anomalies and misguided interpretations, all of which contribute to unnecessary volatility.”
“At the end of the day, playing politics with statistics and forecasting and not maintaining objectivity often tend to backfire and result in loss of credibility,” he added.
The minister stressed that proactivity and pre-emptiveness have been central to OPEC+ strategy.
He also addressed the credibility of OPEC+ approach and strategy.
“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. The more credible we are, the easier our task is in bringing stability to markets, and the more stability we bring, the greater our credibility is cemented and recognized. This is a virtuous cycle that OPEC+ intends to maintain through objective and high-quality analysis and through keeping its focus on market fundamentals,” he said.
He used the Ukraine crisis as an example, saying that at its start “some predicted large supply losses of more than 3 million bpd which caused panic and contributed to extreme volatilities. 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.”
The minister also referenced the OPEC+ decision to cut output in October and how 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 said.
The minister criticized politicizing statistics and forecasting and using them to discredit OPEC+ and its stabilizing role, saying it “agitates consumers and creates confusion in the market and gives rise to anomalies and misguided interpretations, all of which contribute to unnecessary volatility.”
“At the end of the day, playing politics with statistics and forecasting and not maintaining objectivity often tend to backfire and result in loss of credibility,” he added.
The minister stressed that proactivity and pre-emptiveness have been central to OPEC+ strategy.
He also addressed the credibility of OPEC+ approach and strategy.
“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. The more credible we are, the easier our task is in bringing stability to markets, and the more stability we bring, the greater our credibility is cemented and recognized. This is a virtuous cycle that OPEC+ intends to maintain through objective and high-quality analysis and through keeping its focus on market fundamentals,” he said.
