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Saudi Arabia urges OPEC to remain 'Cautious'
Oil & Gas | 18 February 2021

Members of the OPEC oil alliance need to remain cautious as they prepare to consider further output increases as urged by Saudi Arabia. Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, at the online IEA-IEF-OPEC Symposium on Wednesday, said that Oil producers need to remain extremely cautious as uncertainty on the market is still very high.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency,” Prince Abdulaziz bin Salman said at the energy forum in Riyadh. He further added, “The uncertainty is still very high, and we have to be extremely cautious. The scars from the events last year should teach us caution,” as conveyed by Reuters. 

Crude prices have recovered to a one-year high above $60 a barrel in New York as fuel demand rebounds and the 23-nation OPEC alliance constricts supply. Still, the ongoing pandemic poses a continuing threat to consumption, and oil-output losses in the U.S. caused by freezing storms are unlikely to continue.

Saudi Arabia, through its extra cut of 1 million barrels per day (BPD) in February and March has relieved the efforts of the OPEC+ alliance to reinforce the oil market in the first quarter, while demand is still relatively weaker, especially outside Asia.

Oil prices have hit $60 per barrel on the back of the cuts, weakening the U.S. dollar, investors piling into oil for reflation trade, and expectations of a rebound in oil demand everywhere in the concluding part of 2021.

The alliance assisted by the Saudis and fellow oil titan Russia will get together in early March to decide whether they can restore some more of the production that was ceased during the coronavirus crisis.

Riyadh and Moscow have different opinions on how quickly to revive the ceased output, with Russia being generally keener to resume production quickly.

There are growing signs for oil importers that the strengthening market is becoming a problem. Dharmendra Pradhan, energy minister of India, one of the biggest buyers of OPEC’s crude, said at the same conference that higher prices were also harming the global economic recovery.

Prince Abdulaziz’s warning suggests that another round of debate could develop when the Organization of Petroleum Exporting Countries and its allies meet again on March 4.

Iraq, another OPEC+ member who is often eager to open the taps, said last week that the group may choose to keep production balanced at the approaching gathering.

Russia and the United Arab Emirates, who have urged for increases at recent meetings, are yet to make their preferences known.

For Riyadh, however, the comments on Wednesday from the prince recommend that it prefers to keep a lid on supply.


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