Ministers and senior officials in Saudi Arabia have reaffirmed that oil policy decisions will be taken according to the market stability conditions and that is within the OPEC + alliance. They made the remarks at the end of the first ever historic visit of Joe Biden as president of the United States to Saudi Arabia and the Middle East region, according to Al-Arabiya channel.
Biden said on Friday that he shared his view with the Saudi officials with regard to the “dire need” to increase oil supplies, and he expected “further steps in the coming weeks” to that end. Biden told a press conference in Jeddah that he would do all that he could to bring more oil to the market and his country.
Saudi Foreign Minister Prince Faisal Bin Farhan said the US-Arab summit on Saturday did not discuss oil. He said that OPEC+ would continue to assess market conditions and do what is necessary.
Oil prices rocketed to their highest levels since 2008, climbing above $139 a barrel in March, after the US and Europe imposed sanctions on Russia over its invasion of Ukraine, which Moscow calls a “special military operation”. Prices have slipped since then.
Meanwhile, Saudi officials have stressed that any decision to pump more oil will be taken within the framework of OPEC +, which will hold its next meeting on Aug. 3. “We listen to our partners and friends from all over the world, especially the consuming countries,” Prince Faisal bin Farhan told reporters, but in the end, OPEC + will follow market conditions and will provide energy as needed, he pointed out.
The OPEC+ alliance also includes Russia. The United States is trying to impose sanctions against Russia so as to prevent it from benefiting from its oil revenues due to its invasion of Ukraine. However, Riyadh was clear about its commitment to working within the coalition.
Minister of State for Foreign Affairs Adel Al-Jubeir said that Saudi Arabia will boost oil production only in case of a supply shortage in the market. He had played down the idea of any agreement with US with regard to an increase in oil output. “It is not about the agreement but about the Kingdom’s long-term policy of working to ensure that there is sufficient supply of crude oil in the markets and we are following the supply and demand condition very carefully. If there is a potential shortage, we are working to increase crude oil production and that will be made in coordination with members of OPEC and OPEC+ group.”
“The market will continue to determine oil output,” he said, adding that in the absence of any supply shortage, Saudi Arabia will not increase production.
OPEC+ alliance has already moved to speed up production increases in June, after calls from consuming countries including the United States. However, with oil prices dropping from recent highs and recession risks taking over the markets, the picture may change ahead of the upcoming meeting early next month.
Under the terms of the current OPEC+ agreement, Saudi Arabia’s production is set to reach 11 million barrels per day in August, a level it has rarely maintained in its contracts as a crude oil exporter.
In an interview with Al-Arabiya, the oil expert Muhammad Al-Shatti said that the oil market remains subject to the developments of the Russian-Ukrainian conflict, especially with regard to the safety of supplies.
Al-Shatti stated that there are also fears of economic stagnation and the return of the COVID
-19 outbreak in China, and the impact of this on demand, but it is not as much as the effect of the scarcity of supplies.
Al-Shatti indicated that the market will be clearer during the next two weeks, when the OPEC + alliance meet on Aug. 3. He pointed out that the August meeting will determine what will happen in September and whether there will be an increase or the continuation of the current situation. The oil expert believes that the decline in prices during the past days is a temporary decline for a certain period, saying, “then prices will return to the level of $100, and will increase according to the vision of speculators and players in the oil markets.”