“Saudi Arabia will not sell oil to any country that imposes price ceilings on its supplies,” Saudi Energy Minister Prince Abdulaziz bin Salman bin Abdulaziz said.
Prince Abdulaziz bin Salman said in an interview with Energy Intelligence published by the Saudi Press Agency: “The price ceiling, whether imposed on a country or a group of countries, and on oil or any other commodity, will lead to an adverse reaction individually or collectively, with unacceptable repercussions represented by large volatility and instability in the markets.”
“So, if a price cap is imposed on Saudi oil exports, we will not sell oil to any country that imposes such caps on our supplies, and we will reduce oil production, and I would not be surprised if other countries did the same,” he said.
Saudi Arabia’s energy minister said the OPEC+ alliance would stick to production cuts agreed in October until the end of the year.
“There are those who continue to believe that we will amend the agreement … I say they need to wait until Friday, December 29, 2023 to prove to them our commitment to the current agreement.”
Prince Abdulaziz also said there was a big difference between the NOPEC bill proposed by the U.S. Senate and the price cap imposed by Western countries on Moscow because of the Russian-Ukrainian war, but that their potential impact on the oil market was similar.
Last week, bipartisan members of the U.S. Senate reintroduced the bill called “No Oil Production and Export Cartels” or NOPEC. Its passage would change U.S. antitrust law to withdraw sovereign immunity that protects OPEC+ members and its national oil companies in lawsuits over price collusion.
“The NOPEC bill does not take into account the importance of having a reserve of production capacity and the consequences of not owning this reserve on the oil market,” the minister said.
The bill would weaken investments in oil production capacity and cause global supply to decline, he said, adding that imposing a price cap would have the same effect.
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The prince went on to say that price caps, whether imposed on a country or a group of countries, would lead to “an individual or collective backlash with the unacceptable repercussions of large volatility and instability in the markets.”
“If a price cap is imposed on Saudi oil exports, we will not sell oil to any country that imposes price caps on our supplies, and we will reduce oil production, and I would not be surprised if other countries did the same,” he said.
The Group of Seven countries, the European Union, and Australia applied a price cap of $60 a barrel on Russian shipments of seaborne oil on Dec. 5. Russia has said it will cut its supply by 500,000 bpd from March.
Prince Abdulaziz also said that global demand growth would exceed the current global production capacity reserve while emergency inventories are at all-time lows. “That’s why it’s important to implement policies that support the investments needed to increase production capacity in a timely manner and to keep global emergency stockpile levels adequate and appropriate.”
Despite the outlook for global economic growth, the minister said the situation remains unclear regarding the future of the growth recovery as China opens its borders after scrapping strict “zero Covid” policies. Another influencing factor will be the extent to which central banks will make interest rate increases to control inflation, he said.
Oil rises
Oil prices rose in early Asian trading on Wednesday after a big drop last session. Strong OPEC expectations of demand from China helped offset weak investor confidence following the recent collapse of two US banks.
The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday raised its forecast for Chinese oil demand growth in 2023 after the lifting of pandemic-related restrictions in the country, but left its forecast for overall global demand unchanged and attributed this to the risks of a possible decline in global growth.
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