“We do not target or refer to specific prices. We speak of stable and sustainable markets that support the concept of continuing investment and development,” he said. “There is no value in high prices if they are going to incubate low prices in the near and medium terms, and the opposite holds true.”
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But the Saudi oil minister indicated that he still considers current prices low. “Even if current circumstances persist next year as they are now, the longer prices remain low, the more this helps the Kingdom, because it creates an environment that impacts the less well-endowed, less capable producers, but this would have very big domestic and international economic results.”
The current two-year Opec+ agreement is unprecedented in both its duration and in the amount of crude it has removed from the market since it came into force in May, Prince Abdulaziz said, adding that the rise in oil prices since then is the main proof of its success. But he gave no indication whether the deal, which remains in force until April 2022, would be extended, terminated early or changed again.
The Opec+ group recently tweaked the deal by agreeing to raise its collective production quota by just 500,000 b/d in January, rather than the original plan for a 2mn b/d increase. Ministers will decide on further adjustments beyond January on a month-by-month basis, with the next meeting scheduled for 4 January.
Prince Abdulaziz highlighted Saudi Arabia’s role in striking the current Opec+ deal back in April.
“Unfortunately, in the first two months [of the Covid-19 pandemic] there was no consensus” on deepening production cuts, he said. Like others in the Opec+ group, Riyadh responded by increasing output. “The Kingdom did this clearly and deliberately, based on let us play the free market game and see who is most capable of managing that market,” Prince Abdulaziz said.
This proved to other members of the group that market management is essential, he added.
“We were able to bring Opec+ together in three days and to agree a 10mn b/d cut,” he said. “Had we not used our spare capacity … we would not have been able to get things back on track … Every market must be regulated and any international commodity must have regulators.”
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