As per Saudi Energy Minister, the Organization of Petroleum Exporting Countries and its partners, headed by Russia, may be required to limit production to bolster the economy, which is experiencing significant instability and lack of liquidity.
The energy minister told Bloomberg that OPEC+ has the resources to address the current issues. Brent oil prices recovered quickly on the report, trading down 55 cents at $96.17 at 1637 GMT, which had fallen as little as $92.36.
OPEC+ decided to boost production by 648,000 barrels per day in July and August to completely unwind roughly 10 million barrels per day of cutbacks enacted in May 2020 to combat the COVID-19 epidemic.
The organization decided earlier this month to increase output quotas by 100,000 BPD in September in response to demands from significant customers, particularly in the United States, who want to keep prices low.
The "vicious loop is compounded by frequent reports about the resumption of substantial amounts of supplies, vagueness, and confusion about the consequences of price limitations," according to Prince Abdulaziz. According to him, the paper and actual markets have grown more isolated.
"In simple terms, the market is acting abruptly, and as a result, a kind of yo-yo market is getting created. They send inaccurate transmissions at a moment when larger scope, simplicity, and well-functioning marketplaces are required more than ever. Moreover, it enables market players to effectively diversify and handle the enormous dangers and uncertainties they encounter."
According to Prince Abdulaziz, the divergence in oil futures may compel OPEC+ intervention. He was optimistic that OPEC+ would overcome these obstacles since it had "faced a considerably more tough climate in the past."
"We have risen tougher and far more unified than before," said the energy minister. He further told Bloomberg that OPEC+ would soon begin developing a new pact to expand on the group's prior accomplishments beyond 2022.