'Many claim I'm excessively cautious. Well, it's paying off': Saudi oil minister

Lack of investments could trigger new super cycle

  
Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud speaks during a virtual emergency meeting of energy ministers from the group of 20 major economies on oil supply cuts to stabilise global markets hit by the coronavirus disease (COVID-19), in Riyadh, Saudi Arabia April 10, 2020. Saudi Energy Ministry/Handout via REUTERS

Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud speaks during a virtual emergency meeting of energy ministers from the group of 20 major economies on oil supply cuts to stabilise global markets hit by the coronavirus disease (COVID-19), in Riyadh, Saudi Arabia April 10, 2020. Saudi Energy Ministry/Handout via REUTERS

REUTERS

RIYADH: Saudi Arabia’s energy minister has told an audience of top global fund managers that the Kingdom’s oil policy has been effective in keeping the market in balance.

Prince Abdul Aziz bin Salman was addressing the behind-closed-doors Robin Hood Investors Conference on Wednesday attended by the leaders of some of the biggest global hedge funds.

’Many claim I’m excessively cautious. Well, it’s paying off,” he said.

The Saudi energy minister also warned that a new super cycle in global oil prices could be triggered by a lack of new investments in exploration, Bloomberg reported.

He said that his job was to prevent such a super cycle, according to people familiar with his comments.

The minister has long warned speculators of the hazards of bearish bets.

“I think it’s my job, and others’ jobs, to make sure this super cycle doesn’t happen,” he said.

Oil exploration and drilling has slowed in the wake of the pandemic as some national oil producers and international exploration companies have scaled back operations to conserve cash and avoid a new supply glut.

The Organization of the Petroleum Exporting Countries and some of its allies, collectively known as OPEC+, have been curbing production to prevent a glut of global supply as demand for crude oil collapsed in the wake of the pandemic.

“We think the approach of OPEC+ has been spot on in terms of what the region needs, which is oil at a level that helps give a decent amount of benefit to the fiscal deficit posittions but at the same time not quite high enough so as to cause significant headwinds to demand growth,” Fahd Iqbal, Credit Suisse head of private bank Middle East research, told Bloomberg TV on Thursday.

“We are quite bullish on the near-term outlook for oil. Obviously momentum will moderate once we cross the summer period. We think the outlook for oil is more challenging next year when we start to see more supply coming on stream.”

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