“‘It’s not weak. People are pretending it’s weak. It’s all a ploy.’”
That’s Prince Abdulaziz bin Salman, Saudi Arabia’s highly influential oil minister, insisting to reporters in Riyadh that the talk of weakening crude demand that’s been blamed for a sharp retreat for oil prices is the work of speculators rather than a reflection of reality, according to a Bloomberg report.
MarketWatch 50: Abdulaziz bin Salman Al Saud
the U.S. benchmark, briefly touched a more-than-two-year high above $95 a barrel before pulling back.
Crude oil prices pushed higher after the Hamas attack on southern Israel on Oct. 7 sparked fears of a wider conflict that could endanger Middle Eastern oil flows, but the rally didn’t last. Brent and WTI both ended Wednesday at their lowest since mid-July, falling below $80 a barrel, before seeing a small bounce Thursday.
Weak data from China has put a renewed focus on demand from the world’s second largest crude consumer, analysts say, while U.S. demand concerns are also on the rise amid fears of a potential economic slowdown and the health of the consumer.
Oil’s big rally over the summer and fall had been attributed in large part to supply concerns, with Saudi Arabia in July implementing a production cut of 1 million barrels a day, which it proceeded to roll over, extending it through at least the end of the year.
Analysts have argued that price weakness will put pressure on the Saudis to announce an extension of the cut into the first quarter of next year.
For his part, Abdulaziz argued that people are misinterpreting data showing a rise in crude exports from Arab members of the Organization of the Petroleum Exporting Countries. Shipments are seasonal, falling in summer and rising in September and October, meaning they don’t reflect rising production, he explained, according to the report.
The prince called it an “abuse of the numbers” not to distinguish between exports and production.
“We believe the chances that Saudi Arabia will extend its unilateral 1 mb/d cut well into 1Q’24 is certainly increasing given renewed market concerns about Chinese demand and the broader macro outlook,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a note.
“As we see no indication that the Saudi energy minister is prepared to throw in the towel and return to a market share maximization strategy at this stage, the relevant question may be whether he will look to do another short squeeze if current trends continue,” she said.