Post Card from Calgary: The Jury is Still Out

Takeaways from the Opening Session of the 24th World Petroleum Congress

By Helima Croft
Published September 19, 2023 | 2 min read

Key Points

  • In his first public remarks since his country decided to extend its 1 mb/d unilateral production cut through the end of the year, Saudi Energy Minister HRH Prince Abdulaziz stated that OPEC must remain “proactive, preemptive, and precautious,” in the face of continued uncertainty surrounding Chinese demand, European growth, and global central bank action.
  • Noting that “the jury is still out” on the outlook for oil, he reiterated that the cut will be subject to monthly review, and that production adjustments could be made in either direction.

Prince Abdulaziz emphasized that any policy adjustment will be data driven, insisting that Saudi Arabia and OPEC were not seeking to “jack up the prices” such as during the 1980s. He also rejected the IEA’s assessment that Riyadh and Moscow’s unilateral cuts will lead to substantial supply deficits this year. Furthermore, he questioned the accuracy of recent IEA forecasts, and suggested that the Paris-based organization was more focused on political advocacy.

In contrast to a year ago, relations with the US seem to be on stronger footing despite the recent rise in oil prices. Prince Abdulaziz noted the importance of the bilateral engagement between the US and the Kingdom as part of the broader efforts to create the Memorandum of Understanding for the India-Middle East-Europe Corridor that was announced as part of last week’s G20. We will continue to closely monitor the state of the ongoing US-Saudi negotiations to craft a comprehensive diplomatic agreement.

Prince Abdulaziz was also keen to draw parallels between Saudi Arabia’s transition policies and those of WPC host Canada, particularly in the fields of CCUS, methane abatement, and critical minerals development. On the latter, he drew attention to the concentration risk in critical minerals supply chains.

Finally, when asked if market participants could divine the “Prince Abdulaziz Doctrine” from his four-year tenure as Energy Minister, he referenced his favorite central banker Alan Greenspan. The former Fed Chairman was known for keeping decisions closely guarded and once famously stated, “If I seem unduly clear to you, you must have misunderstood what I said.” Though we would contend that Prince Abdulaziz also takes a page from Mario Draghi, we could see room for more plot twists in the coming months, given his professed affection for Maestro Greenspan today.

Helima Croft authored “Post Card from Calgary: The Jury is Still Out,” published on September 18, 2023. For more information on this commentary or to access global commodities research, please contact your RBC representative.

Our Experts

Helima Croft
Helima Croft
Head of Global Commodity Strategy and MENA Research, RBC Capital Markets

Stay Informed

Get the latest insights and news from RBC Capital Markets delivered to your inbox.