OPEC + does not politicize its decisions and focuses on market fundamentals

The Saudi Minister of Energy, Prince Abdulaziz bin Salman, said that the decision of OPEC + in the wake of the Ukraine crisis turned out to be the right decision.

The minister added, in an interview with the Saudi Press Agency, “SPA”: “We do not politicize OPEC + decisions, we keep political affairs outside our analyzes and expectations of market conditions, and we focus on market fundamentals only, and this enables us to assess the situation more objectively, and more clearly, and this in turn enhances our credibility.”

The minister continued: “At the beginning of the Ukrainian crisis, some expected a loss of large quantities of supplies, exceeding three million barrels per day, which raised fears and contributed to sharp fluctuations in the markets. In those circumstances, OPEC + was accused of not responding to the crisis in a timely manner, but the shortage The expected supply was not met.

He stated that last October, the decision of OPEC +, which it took to cut production, was sharply criticized, in which the decision was described as “risky” and “unfortunate”, and there were hints that it had political motives behind it, and that it might push the global economy into recession and harm developing countries. . However, it turned out, once again, that the decision of OPEC + was the right decision to support the stability of the oil market and the oil industry.

Prince Abdulaziz indicated that the problem lies in the fact that the politicization of statistics and forecasts, and their use to question the credibility of OPEC + and its role in market stability, leads to consumer excitement, causes confusion in the market, and leads to imbalances and misinterpretations, all of which contribute to unjustified turmoil in the market. market.

The minister stressed that there is inaccurate information that is almost always present in some forecasts. While OPEC + maintained the numbers related to demand for the year 2021, some parties continued to significantly reduce historical and current demand estimates, and this resulted in differences referred to. Usually with the “mystery of the missing barrels”, and later these parties had to correct these differences at the beginning of 2022 AD, by raising the estimates of the level of demand. It wouldn’t be surprising if the “missing barrels” issue resurfaced in early 2023, following the same pattern of underestimating demand again for 2022.

The minister said: “In the end, the politicization of statistics and projections without objectivity, often backfires and leads to a loss of credibility.”

He revealed that the market was subjected to a number of severe shocks during the past years, and had it not been for the initiative-based approach and proactive measures adopted by OPEC +, these shocks would have caused chaos in the oil markets, as other energy markets witnessed, even before the Ukrainian crisis. OPEC + has no choice but to remain proactive in the face of the many situations that cause uncertainty in the market, and this is not an easy task, especially since the market tends to overreact to the news, both negatively and positively.

He added, “We have seen a lot of unwise interventions in the energy markets. However, I must repeat, here, that OPEC+’s objective assessment of the markets, its proactive approach, and coherence within the group puts it in a better position and better able to contribute to strengthening market stability.

The minister said, “In all economic fields, starting with financial matters and ending with trade in commodities, credibility is a major component for building trust, which leads to market stability. Without credibility, markets are more volatile and less attractive to all categories of dealers. The oil market is no different from this.” “.

The minister stressed: “We are in OPEC +, we will not hesitate to deal with any situation in the market, and we realize that the greater our credibility, the easier our task in achieving stability in the markets becomes, and the more stability we achieve, the more we will be able to enhance our credibility and gain recognition from others.” This is, without a doubt, a positive cycle that OPEC + is working to maintain, through objective analysis of high quality, and continuing to focus on market fundamentals.