“Our thing is to be careful,” Prince Abdulaziz bin Salman told Bloomberg on the sidelines of the COP27 summit in Egypt. “It’s about being responsible and not forgetting what the market demands,” said the energy minister of the world’s top crude oil exporter. Last month, OPEC+ decided to cut its oil production target by 2 million barrels per day (bpd) from November. While the actual cut is expected to be about half that number, at 1.1 million bpd, it is still the largest cut since the record output cut announced in April 2020, when oil demand fell at the start of the pandemic. Saudi Arabia and nearly all other OPEC+ producers were quick to reject US government criticism that the group had made a “short-sighted” and “misguided” decision to cut supply, saying it was a precautionary move to respond to market and economic realities that had no political intentions at all. The next OPEC+ meeting is on December 4, and judging by the Saudi energy minister’s comments today, the group will be in no rush to change course and decide to boost production.
Prince Abdulaziz bin Salman also cited the latest International Monetary Fund (IMF) outlook for the global economy and aggressive central bank rate hikes as headwinds for the economy. The IMF said in its October outlook that global growth is forecast to slow from 6.0% last year to 3.2% in 2022 and 2.7% in 2023. This is the lowest growth profile since 2001, apart from the global financial crisis and the acute phase of the pandemic. “Overall, this year’s shocks will reopen economic wounds that only partially healed after the pandemic. In short, the worst is yet to come and, for many people, 2023 will be a recession,” said Pierre-Olivier Guerinhas, IMF Economic Adviser and Director of Research. Commenting on today’s announcement of the first easing of Chinese Covid measures since the start of the pandemic, Saudi Arabia’s energy minister told Bloomberg: “The jury is still out” on how soon China could gradually lift its strict rules .
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