Energy minister says OPEC+ plays a role in containing inflation

Prince Abdulaziz bin Salman, Minister of Energy

Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, said that the OPEC+ alliance has a role in “taming and containing” inflationary pressures, just hours after Brent crude surged back above $75 a barrel.

The comments come at a time when OPEC+ countries weigh whether to increase production further in the coming months.

The oil bloc is scheduled to meet online next week to decide its production policy for August and beyond, after boosting output from May to July.

“We have also a role in taming and containing inflation, by making sure that this market doesn’t get out of hand,” Bloomberg reported, quoting Prince Abdulaziz during a conference organized by Bank of America.

At the same time, the minister also warned that it was not clear whether oil prices were rising due to “real supply and demand” or because of “expectations and trajectories that are excessively optimistic”.

The energy minister’s comments suggest Riyadh is walking a fine line ahead of the OPEC+ meeting. He expects the group should remain cautious because the oil market was not out of the “doldrums” created by the pandemic. At the same time, he warned traders against conflating caution with inaction.

“We have to be cautious. But that does not mean we do not have to do something,” Prince Abdulaziz said. “It means we have to ensure that we do not make any missteps here or there.”

He acknowledged the drop in global oil inventories and better expectations for demand during the second half of this year and into 2022.

However the energy minister added that OPEC+ “cannot discount any vicious return of COVID-19 cases,” and warned that the potential revival of production from Iran and Venezuela are big uncertainties the group needs to consider.