Saudi oil minister warns market speculators to ‘be careful’ ahead of OPEC+ meeting

Saudi Oil Minister Prince Abdulaziz bin Salman told market speculators on Tuesday to “be careful”, reiterating his warning that they could face pain ahead.

“The speculators, like in any market, are here to stay. I keep saying they’re gonna be ouch. They did it in April. I don’t have to show my cards, I am not [a] poker player (…) but I would just tell them, be careful,” he told an energy-focused panel at the Qatar Economic Forum in Doha.

The Saudi oil minister has previously spoken out against oil price speculators looking to profit from the forecast of production decisions by OPEC+, which meets on June 4.

More recently, several members of the OPEC+ alliance announced voluntarily – and independently of the group’s broader strategy – that they would cut their crude oil production by 1.6 million barrels per day. The move briefly boosted prices, which have since reversed their gains. Ice Brent futures with July expiration were up 50 cents a barrel from May 22 settlement at $76.49 a barrel at 12:05 a.m. London time.

OPEC+, a group of 23 oil-producing nations chaired by Saudi Arabia, decided in October to cut output by 2 million barrels a day in a bid to support prices amid concerns over global consumption . The move was met with an immediate reaction from the United States to pressure on fuel-consuming households.

“We were, like OPEC+, charged in October, charged in April. Who has the right numbers? Who measured the situation in a way that was much more, I would say, responsible, but careful?” Abdulaziz said on Tuesday.

“I think over the last six to seven months we have proven that we are a responsible regulator,” he added, noting that the market is experiencing continued volatility and is forcing OPEC+ to stay. proactive and preventive.

In the weeks following the announcement of April’s voluntary cuts, crude prices were depressed due to banking turmoil, signs of recession and a slower-than-expected Beijing reopening and subsequent rise in demand from China, the world’s largest importer of crude oil.

Market watchers are now wondering if OPEC+ will head in June for another production cut at crutch prices, even as Paris-based watchdog IEA now sees a deep supply squeeze on the horizon.

“The current market pessimism … contrasts sharply with the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by nearly 2mb/d,” the IEA said in its latest report on the oil market. May report.

The organization’s executive director, Fatih Birol, nevertheless told CNBC on Sunday that a potential — though unlikely — default by the United States could trigger a drop in oil demand and prices.

In a May 17 note, analysts at Swiss bank UBS cut their Brent price forecast from $10 a barrel to $95 a barrel by the end of the year, given higher crude oil volumes. higher than expected and recession fears. They predict the market will be undersupplied by nearly 1.5 million barrels per day in June.

“With several OPEC+ member countries voluntarily removing barrels from the market and amid rising demand during the Northern Hemisphere summer, we expect larger draws on inventory to materialize and bring investors in the oil market,” they said.

Saudi Arabia’s Oil Minister also highlighted on Tuesday the risks of market uncertainty, as well as the gradual depletion of spare capacity in producing countries – an argument he has previously deployed to make the case for greater investment in oil and gas. fossil fuels, in addition to spending on renewable projects.

“Look where we are now: energy security is in jeopardy, running out of capacity because countries are not investing in both oil and gas,” he said.

“We have a very fun demand trajectory. So if you are a hedger, as we are, we will have to take steps to anticipate any possibility of additional volatility (…) but we frankly accept the challenge, and we will continue to Try the challenge.”