Oil Rises as Saudi Arabia Signals OPEC Cuts to Continue
Oil prices rose on Monday after Saudi Arabia, the world’s largest exporter of crude, named oil veteran Prince Abdulaziz bin Salman as its new energy minister, a move seen strengthening an output-cutting deal between OPEC and other producers.
Prince Abdulaziz, son of Saudi King Salman and a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries, replaced Khalid al-Falih on Sunday.
Global benchmark Brent LCOc1 crude futures were up 35 cents at $61.89 a barrel by 0846 GMT, while U.S. West Texas Intermediate CLc1 was up 31 cents at $56.83 a barrel.
Price Abdulaziz helped to negotiate the current agreement on supply cuts between OPEC and non-OPEC countries including Russia, a group known as OPEC+ and has been instrumental in cementing that cooperation, OPEC sources said.
Speaking on Monday, Prince Abdulaziz said the pillars of Saudi policy would not change and that the OPEC+ deal would survive.
“The options for a change of policy are relatively limited,” said Olivier Jakob, analyst at Petromatrix. “The price reaction is muted because we don’t expect a strong change.”
Russia’s oil output in August exceeded its quota under the OPEC+ agreements to cut 1.2 million barrels per day.
OPEC oil output rose in August, gaining for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran, a Reuters survey found.
The United Arab Emirates’ Energy Minister Suhail al-Mazrouei said on Sunday that members of OPEC and non-OPEC producers were “committed” to achieving oil market balance.
Prices climbed for a fourth day running on Monday, also supported by comments from Mazrouei that OPEC and its allies were committed to balancing the crude market.
The OPEC+ deal’s joint ministerial monitoring committee will meet on Thursday in Abu Dhabi.
Trade and geopolitical tensions are affecting the market more than demand and supply, Mazrouei said, but he was quick to rule out hasty steps influenced by the trade war between the United States and China.
“The fear of slower (oil) demand is only going to happen if that tension is escalating and I am personally hopeful that is not the case,” Mazrouei told Reuters.
Prices on Monday were also supported by a rise in oil imports in China in August, with shipments to the world’s biggest importer up 3% from July and nearly 10% higher in the first eight months of 2019 from a year earlier.
In the United States, drilling companies cut the number of operating oil rigs for a third week in a row last week.