Saudi Arabia's new energy minister, Prince Abdulaziz bin Salman, said Monday that oil production cuts would benefit all exporting nations, in an indication he will support further reductions to address an oversupplied market and sagging prices.
The International Energy Agency (IEA) last week lowered its growth forecast for oil demand for 2019 and 2020, blaming the ugly US-China trade dispute which has triggered fears of a global recession.
While the rest of the market was stuck in sideways action, energy sector-related exchange traded funds led the charge Monday on rising oil prices in response to Saudi Arabia energy minister's confirmation that there will be no major change to the kingdom's oil policy.
Prince Abdulaziz will continue the kingdom's oil policy where his predecessor left off, OPEC Secretary-General Mohammad Barkindo said on Monday.
While Prince Mohammed's programme is ultimately created to wean Saudi Arabia's economy off its addiction to oil, in the short term he needs a higher oil price to finance his plans. -China trade dispute and Brexit could press the case for the Organization of the Petroleum Exporting Countries and allies including Russian Federation to maintain or adjust their policy of cutting output.
But with the changes in place in Saudi Arabia where the Royal family is now in full control of this important ministry, it needs to be seen whether there would be realignment of the Kingdom's energy policy.
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The appointment of Prince Abdulaziz bin Salman as the new energy minister mirrors the ascent of his half-brother Crown Prince Mohammed bin Salman, the de facto ruler.
Analysts say that while cuts could help prices, they could also mean producers lose further market share. United States production generated a record 12.65 million barrels per day (MBD), based on August data as new export pipelines projected in the coming months prompt USA energy officials to produce some 13.85 MBD by end of 2019.
"There is nothing radical in Saudi Arabia, we all work for the government, one person comes, one person goes", he said while attending an energy conference in Abu Dhabi.
The last time Saudi policymakers appeared to push oil prices higher to chase an improved IPO valuation, in the first half of 2018, the result was an oversupply which contributed to the slump in prices in 2019. In 1985, while in his 20s, he became an adviser to the Saudi energy ministry before being named deputy oil minister and assistant oil minister.
With so much uncertainty in the market now, the group could discuss whether there's need for a deeper cut at its December meeting, said a person familiar with Saudi thinking.
Al-Falih's diminishing role had led to reports that he was out of favor with Prince Mohammed, who is pushing to diversify the Saudi economy away from its dependence on oil revenue.