On Monday, Saudi Energy Minister Abdulaziz bin Salman, while attending the 24th Global Oil Conference in Calgary, stated that OPEC's primary goal is to maintain stability in the oil market and enhance global energy security, rather than setting specific crude oil price targets. He emphasized the global need to focus on energy security, with the main priority being market stability. He mentioned that the International Energy Agency's (IEA) warnings have not come to fruition.
The Saudi Energy Minister further explained their approach to handling uncertainties from various directions with three words: "Proactive, preemptive, and precaution."
Regarding production plans, he mentioned that they would review them monthly. Decisions will be made after concrete data indicates a tightness in the crude oil market.
China's demand for crude oil is a significant driver of global oil prices. Abdulaziz bin Salman said that no conclusions have been drawn regarding this matter.
Since April of this year, in response to sluggish oil prices, Saudi Arabia has been leading the charge in reducing crude oil supply from OPEC and its allies. Recently, Saudi Arabia announced the extension of its voluntary cut of 1 million barrels per day until the end of December, while Russia extended its export cut of 300,000 barrels per day to the end of December.
Due to strong demand from China and the U.S., the two largest crude oil consumers, the overall demand for crude oil is at a historic high. Coupled with supply restrictions from Saudi Arabia and Russia, this has led to tighter supplies and increased oil prices.
OPEC's latest monthly report released last week predicts a supply shortage of over 3 million barrels per day in the global crude oil market for the fourth quarter, potentially the largest shortage in over a decade. OPEC's forecasts for global crude oil supply and demand for this year and the next remain largely unchanged.
The rapid rise in oil prices in recent months has boosted the economies of oil-producing countries like Saudi Arabia. Some analysts suggest that Saudi Arabia might need an oil price close to $100 per barrel to support its government spending and Crown Prince Mohammed bin Salman's ambitious projects.
Amin Nasser, CEO of Saudi Aramco, who also attended the Global Oil Conference, predicted that crude oil demand in the second half of this year would reach a record high of 103-104 million barrels per day. Predictions of peak oil usage have proven unrealistic. The continued heavy use of crude oil makes attempts to phase out fossil fuels too quickly "dangerous."
Nasser emphasized the importance of carbon capture, storage, and utilization in the foreseeable future. Without carbon capture and storage, the net-zero target for 2025 cannot be achieved.
The Saudi Energy Minister expressed support for the energy transition. However, Nasser candidly stated that the energy transition has "no quick fixes" and it's unlikely to achieve the goals set by the Paris Climate Agreement.
On Monday, global oil benchmark Brent crude approached $95 at one point, while WTI crude rose to $91.03, nearing its highest point in ten months. It's poised to record its largest quarterly increase since the Russia-Ukraine conflict erupted in the first quarter of 2022. However, by midday Eastern Time, Brent crude futures fell by 0.1%, dropping below $93.80.
Analysts suggest that the intraday spike and subsequent drop in oil prices were due to the Saudi Energy Minister's "inconclusive" stance on China's oil consumption and Saudi Aramco's downward revision of its 2030 crude oil demand forecast. Despite OPEC+'s restrictive measures tightening global supply and supporting oil prices, the oil price has risen to overbought territory, making market corrections more likely.