OPEC+ needs to remain cautious with its approach to oil production adjustments despite rising prices.
Bin Salman noted that higher production is only justifiable when there is a clear purpose for it, which, according to him, was now absent as utilities switching from gas or coal to oil were doing on a very limited scale.
The energy minister also said he expected a significant increase in combined OPEC+ oil supply by the end of next year, even without the hypothetical return of Venezuela or Iran to international markets, bin Salman also said.
“We don’t take things for granted,” the official said. “We still have Covid, there are still lockdowns,” and jet fuel supply remains constricted. “So, we’re not yet out of the box and we’re not out of the realm of Covid.”
OPEC+ is adding 400,000 bpd to its combined output every month, but some members have found it difficult to boost production, and this has resulted in overcompliance with the voluntary cuts and continued tight supply. However, the cartel has so far resisted calls for a greater boost in output to catch up with demand.
This weekend, Nigeria’s oil minister chimed in with his Saudi counterpart in saying the cartel should not rush into any production boosts as demand remained threatened by Covid flare-ups.
“We have to look at the situation closely before we take action,” Timipre Sylva told Bloomberg in an interview in Riyad. “It’s still very fragile. We must be very cautious before we take the next move.”
“We’ve seen the slow down in China,” the Nigerian official also said. “A lot of people are calling for more oil, but we’re looking at problems in some economies. We know that we haven’t completely opened up yet.”