Oil Rises as New Saudi Minister Signals OPEC+ Cuts to Continue

Prince Abdulaziz says no ‘radical’ change in Saudi oil policy
WTI crude futures advance 1.2% to trade above $57 a barrel

By Tsuyoshi Inajima and Grant Smith

(Bloomberg)

Oil rose for a fourth day after Saudi Arabia’s new energy minister signaled that OPEC and its allies will continue with production cuts as the group prepared to gather in Abu Dhabi.

Futures added 1.2% after climbing 2.6% last week. Prince Abdulaziz bin Salman, appointed at the weekend after Saudi King Salman dismissed Khalid Al-Falih, said there will be no radical change in the policy of OPEC+, which has cut crude production this year to prevent a glut and shore up prices. The United Arab Emirates energy minister promised a push to get all members committed to curbs, but said there’s no recommendation to make deeper reductions.

Oil capped a second weekly gain on Friday following a decline in U.S. crude stockpiles and efforts from Federal Reserve Chairman Jerome Powell to calm fears of a possible recession. Prices were further supported Monday by Prince Abdulaziz’s remarks, while a Russian official said his country intends to maintain its critical alliance with Saudi Arabia following the appointment.

“Prince Abdulaziz is very experienced and has served in the energy industry for decades,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “His comments today suggest we shouldn’t expect any major policy changes from the kingdom, which still wants to see oil inventories falling.”

West Texas Intermediate oil for October delivery advanced 70 cents to $57.22 a barrel on the New York Mercantile Exchange as of 9:10 a.m. local time. The contract climbed 22 cents to $56.52 on Friday.

Brent for November rose 67 cents to $62.21 a barrel on the ICE Futures Europe Exchange, and traded at a $4.92 premium to WTI for the same month. The global benchmark crude capped a fourth weekly gain on Friday.

See also: Saudi Arabia Has a New Energy Minister: What It Means for Oil

Prince Abdulaziz served as deputy petroleum minister for a dozen years and most recently as minister of state for energy since 2017. He takes charge as the Organization of Petroleum Exporting Countries and its allies, most notably Russia, work to bolster prices at a time when a raging trade war between the U.S. and China weighs on global demand.

The prince said that the trade war has put a “fog” around the oil market, but added that he isn’t too concerned about U.S. shale output.

Other oil-market news:

The prospect of a prolonged U.S.-China trade war continuing to sap demand is depressing oil prices by $15 a barrel even as physical markets are at their tightest in half a decade, according to Energy Aspects Ltd.
The International Energy Agency cut its forecast for global oil-demand growth again, blaming the trade war. It now sees growth this year averaging about 1 million barrels a day, Executive Director Fatih Birol said in Abu Dhabi. That’s about 10% lower than the agency’s previous forecast.
Uncertainties in geopolitics, the economy, technology and the oil industry are pulling the market in different directions, Giovanni Serio, global head of research at Vitol, said at a conference in Singapore.
Iraq is committed to OPEC’s cuts and will soon start putting the curbs into effect, Oil Minister Thamir Ghadhban said in a statement.

To contact the reporters on this story:
Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net;
Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story:
Serene Cheong at scheong20@bloomberg.net
Amanda Jordan