Saudi Arabia: 2022 oil production cuts show OPEC’s flexibility

(Bloomberg) — Saudi Arabia’s energy minister said oil production cuts announced last year by OPEC+ show the group’s readiness to be flexible.

The kingdom and other members of the OPEC+ coalition have already signaled the group will stick to its current oil production targets for the rest of the year. Prince Abdulaziz bin Salman said that past policies have been determined by technical studies of market balances and — if needed — the group can adapt.

“We are flexible enough to adjust OPEC decisions if needed,” the minister said in Arabic at a conference in Riyadh, noting a decision last year to lower output.

Prince Abdulaziz has indicated that the bar for intervention by the Organization of Petroleum Exporting Countries will be high. He said earlier this month, with respect to changes in global demand: “I will believe it when I see it and then take action.”

In October, OPEC and its partners took the step of assigning fixed oil production targets for a full year ahead. Key officials have since indicated they intend to stick to that plan, even after Russia announced a 500,000 barrel-a-day cut in its own oil output in retaliation for sanctions.

Oil has had a mixed start to 2023 as traders weigh the market impact of China’s reopening, supply curbs by Moscow and persistent concerns that tighter U.S. monetary policy may trigger a recession.