Saudi Energy Minister Abdulaziz bin Salman said: “If a price cap is placed on Saudi oil exports, we will not sell oil to any country that imposes a price cap on our supplies.”
And the Minister of Energy of Saudi Arabia conducted an interview with the Energy Intelligence website, during which he touched on the factors influencing the trends in the oil market and assessments of the state of the world economy.
He stressed that: “There are many factors affecting market trends, and it is estimated that the global economy will continue to grow this year and next, but there is still uncertainty about the growth rate, in addition to China recently starting the phase recovery after a long closure” after the Corona virus pandemic, but the period required for recovery is still not clear.
The Minister added: “The economic recovery is causing inflationary pressures and this could prompt central banks to step up their efforts to control inflation, and the overlap of these and other factors limits clarity, and the only prudent measure that can be followed in such conditions is fraught with uncertainty is to to keep the agreement we made last October through the end of this year, and that’s what we’re committed to doing as we need to make sure the positive signs are sustainable.”
The Minister pointed out: “There are those who still believe that we can amend the agreement before the end of the year, and I tell them that they need to wait until Friday, December 29, 2023, to testify to our full commitment to the current agreement. .”
He added: “There is a big difference between the NOPEC bill and the price cap extension, but their potential impact on the oil market is the same, as such a policy adds new risks and more uncertainty at a time when clarity and stability are most needed, and I I have to repeat my point of view. Which I stated in August and September when I confirmed that such a policy would inevitably lead to increased market instability and fluctuations, and this would negatively affect the oil industry. Especially when compared to all other commodity markets.
The minister explained: “The NOPEC bill does not take into account the importance of having a reserve of production capacity and the consequences of not owning this reserve in the oil market. The NOPEC bill weakens investment in oil production capacity and will cause global supply to fall sharply relative to future demand.” The impact of this will be felt throughout the world, in producing and consuming countries, as well as in the oil industry. This also applies to price ceilings, whether imposed on a country or group of countries, or on oil or any other commodity, as this will lead to an individual or collective adverse reaction with consequences. Large fluctuations and instability in the markets are unacceptable. So if there is an export price cap on Saudi oil, we will not sell oil to any country that imposes a price ceiling on our supply, and we will cut oil production, and I would not be surprised if other countries take the same action.
The minister warned: “Global capacity buffer and emergency stocks represent a basic safety net for the oil market in the face of potential shocks. I have repeatedly warned that global demand growth will exceed the current level of global capacity at a time when emergency reserves are at their lowest. history.” This is why it is important to have policies that support the investment needed to increase production capacity in a timely manner and maintain adequate and appropriate levels of global emergency stocks.
The minister concluded: “We in the Kingdom of Saudi Arabia have actively expanded our production capacity to reach 13.3 million barrels per day by 2027 and work on this expansion is now in the design phase and the first increase of this expansion is expected to take effect. in 2025″.
Source: Saudi newspaper Okaz.