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Saudi Arabia remains cautious on raising oil production


Some market forecasters have predicted rising oil demand in the coming months. This is due to favourable economic data from some oil-consuming countries and the reopening of Chinese society, although Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, has said he remains cautious about the need to raise oil production.

Speaking in Riyadh at an energy economics conference, bin Salman said:

“…forecasters are good forecasters. They do their best but not necessarily what they forecast happens as a reality. So, if people can adapt it to my other mode, which is, ‘I will believe it when I see it, and then take action’ — it’s a much more profound, self-assuring, cautious approach.”

He did accept, however, that a shortage of investment in the oil industry and the current geopolitical situation could lead to supply shortages in the future. Nevertheless, he insisted that the market should have faith in the OPEC+ group’s ability to regulate it. The group includes some 23 oil-producing countries and has a major influence on the market as a collective swing producer.

Companies with US-based assets like ExxonMobil, the maker of the Mobil SHC gear oil, are not bound by OPEC+ decisions, but US oil production has yet to return to pre-pandemic levels, with growth expected to be slow.

A key advisory group to OPEC+ recently recommended that the bloc maintain its current output curbs, with rising COVID-19 cases in China and the continuing potential for a global recession weighing down on any expectations of rising demand.

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