New Saudi energy minister says producers should ‘share responsibility’ to balance oil market ahead of OPEC meeting.
ABU DHABI, United Arab Emirates — Saudi Arabia’s new energy minister suggested on Monday that oil producers would need to share greater responsibility to balance the market in comments that marked his debut since being named to one of the most important positions in the kingdom the previous day.
Prince Abdulaziz bin Salman’s remarks indicate he will likely continue a similar policy to that of his predecessor, Khalid al-Falih, who led the deal to cut global production among major oil producers. Al-Falih had been in the role since 2016, but saw his portfolio and role diminished in the days leading up to his replacement as energy minister early Sunday.
Prince Abdulaziz was speaking in Abu Dhabi, the United Arab Emirates, at an energy conference ahead of a meeting later this week between OPEC member-states and other major oil producers like Russia to review an agreement to cut production.
The group, known as OPEC-plus, agreed this year to extend production cuts of 1.2 million barrels per day until March 2020.
“It’s all about incremental contributions that can make a deal work and work better, or may work in a less optimal way,” Prince Abdulaziz said.
Saudi Arabia has led production cuts as OPEC’s kingpin to keep oil prices from sliding further, even as Iranian and Venezuelan oil exports are down due to U.S. sanctions. The Saudi-driven strategy, however, has not been able to push prices up significantly with global trade tensions between China and the U.S. weighing on oil prices.
Prince Abdulaziz, who is the first prince from the ruling Al Saud family to lead the country’s energy ministry, said he did not want to be “too presumptuous” by discussing what he thinks the group of major oil producers should do heading into Thursday’s OPEC meeting.
“I’m not here to pre-empt the meeting that will be held in two days,” he said. “I respect consensus and maybe because we’re the biggest exporter that makes it even more incumbent on us to stress the importance of everybody.”
International benchmark Brent crude was trading Monday above $61 a barrel, up slightly from where it was trading on Friday.
Still, that’s considerably below the $80-$85 a barrel that analysts say is needed to balance Saudi Arabia’s budget. Defending oil prices, or at least working to keep them from plummeting, is a key task for Saudi Arabia’s energy minister.
Prince Abdulaziz said he wouldn’t describe concerns over global trade tensions that are impacting oil prices as a “trade war,” saying: “I’m fundamentally an optimist.”
He also waved off the International Energy Agency’s projections that demand for oil was slowing.
“I think the market is now is driven by negative sentiments emanating from negative views, but I don’t believe that demand has been impacted,” he told reporters on the sidelines of the conference.
The prince is King Salman’s fourth son and an older half brother to the 34-year-old Crown Prince Mohammed bin Salman.
He enters the job with a lifetime of experience in Saudi Arabia’s energy sector and is seen as a safe and steady choice to lead the ministry, where he will oversee production of one of the world’s largest oil exporters. He has held senior roles in the energy ministry for more than three decades and most recently was minister of state for energy affairs.
Offering a glimpse into how he’s approaching the job of energy minister, Prince Abdulaziz described himself as a “kitchen or basement man.”
“I belong to the downstairs. I’ve always liked working in the “basement,” he said, adding that he’s content with the notion of serving “my country, my king.”
Prince Abdulaziz also made a brief mention of his much younger brother, referring to him as “Prince Mohammed” when thanking King Salman, the crown prince and his predecessor al-Falih for allowing him to pursue work he enjoyed in his previous role as state minister.
Prince Abdulaziz also said Saudi Arabia wanted to pursue a “full cycle” nuclear program, which would entail the kingdom processing and enriching its own uranium. That has spooked nonproliferation experts, who warn such technology could allow Saudi Arabia to pursue a nuclear weapon amid heightened tensions between Iran and the U.S. over Tehran’s program.
Dan Brouillette, a deputy U.S. energy secretary who attended Monday’s event, said he hoped Saudi Arabia would instead choose to go with a so-called “123 Agreement” like the United Arab Emirates. The UAE choose to agree to strict inspections and a pledge never to pursue uranium enrichment and plutonium processing.
“Personally, I think that’s something we have to work out with them,” Brouillette told journalists. “I think it’s very important that we stick to the 123 Agreements. What they look like at the end is going to be a subject of negotiation, but as we move forward with U.S. technology in particular, we are very much committed to finding an appropriate 123 with Saudi Arabia.”