Opec+ can adjust output policy if market conditions change, Saudi Energy Minister says

The alliance agreed to stick to its existing oil output cuts earlier this month

Saudi Energy Minister Prince Abdulaziz bin Salman said Opec+ remains flexible enough to output decisions if needed. AFP

The Opec+ group of 23 oil-producing countries remains flexible and can alter its output policy if market conditions change, Saudi Arabia’s Energy Minister has said.

“We are flexible enough to adjust Opec+ decisions if needed,” Prince Abdulaziz bin Salman said at a conference in the kingdom on Monday, according to a Bloomberg report.

His remarks come after the group agreed to stick to its existing oil output cuts of 2 million barrels per day at a meeting earlier this month.

The next meeting of the joint ministerial monitoring committee is scheduled for April 3.

Last week, Opec raised its 2023 oil demand forecast by 100,000 bpd amid expectations of an economic rebound in China, the world's largest crude importer.

“Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions and the effect this will have on the country,” the group said in its monthly oil market report.

However, economic factors such as high inflation, monetary tightening policies, sovereign debt levels and political tension have the potential to dampen the outlook for oil demand, Opec said.

Brent, the benchmark for two thirds of the world’s oil, surged to $140 a barrel after Russia’s invasion of Ukraine last year.

The international benchmark has since given up most of those gains and is currently trading at about $84 a barrel.

Russia, the world’s second-largest oil producer after Saudi Arabia, said it would cut production by 500,000 bpd, or about 5 per cent of output, in March after the West imposed price caps on its crude and refined products.

On February 5, the G7 and the EU agreed to set the price cap at $100 a barrel for products that trade at a premium to crude, such as diesel, and $45 a barrel for products that trade at a discount, such as naphtha and fuel oil.

The price cap was introduced along with an EU ban on Russian diesel and other refined products.

The International Energy Agency has predicted that the global supply of crude oil will surpass demand in the first half of this year.

However, the agency also noted that the balance could swiftly transition to a deficit as demand rebounds and Russian output declines.

The Paris-based agency expects global oil demand to rise by 2 million bpd this year, with 900,000 bpd coming from China alone.