Saudi Minister Says OPEC+ Could Cut Production At Any Time
Citing “disconnect” in the oil futures market, Saudi Energy Minister Prince Abdulaziz bin Salman dangled the threat of potential OPEC+ production cuts that could come at any time.
In an interview with Bloomberg on Monday, the Saudi energy minister said that “extreme volatility” was “undermining the market’s essential function of efficient price discovery”, in turn rendering it impossible for physical users to manage the costs of hedging or navigate the inherent risk.
“This vicious circle is amplified by the flow of unsubstantiated stories about demand destruction, recurring news about the return of large volumes of supply, and ambiguity and uncertainty about the potential impacts of price caps, embargoes, and sanctions,” the Prince told Bloomberg.
Without sufficient liquidity, he said, there is a high level of disconnect, which means the “markets can’t reflect the realities of the physical fundamentals in a meaningful way…”.
The Prince described the markets as being in a state of “schizophrenia” and creating a “yo-yo” market that has lent a false sense of security.
“Spare capacity is severely limited and the risk of severe disruptions remains high,” he said.
The energy minister insisted that OPEC+ is “stronger and more cohesive than ever”, but also indicated that the expanded cartel could cut output at any time “and in different forms”.
Retrieved from:
https://oilprice.com/Energy/Energy-General/Saudi-Minister-Says-OPEC-Could-Cut-Production-At-Any-Time.html