Saudi Crown Prince Mohammed Bin Salman’s order to flood oil markets three years ago during a dispute with Russia ultimately gave the kingdom confidence to be more assertive in shaping OPEC+’s policies, the energy minister said in a recent TV interview.
(Bloomberg) — Saudi Crown Prince Mohammed Bin Salman’s order to flood oil markets three years ago during a dispute with Russia ultimately gave the kingdom confidence to be more assertive in shaping OPEC+’s policies, the energy minister said in a recent TV interview.
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In March 2020, the cartel’s leader was at an impasse with Moscow: Riyadh wanted to cut output in response to the Covid-19 pandemic, but the Kremlin wanted to wait, Energy Minister Prince Abdulaziz bin Salman said as part of a documentary series aired by Saudi-owned MBC Group.
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When the minister told the crown prince that the cartel hadn’t reached an agreement on quotas, the kingdom’s de facto ruler said Saudi Arabia should hit its “maximum production capacity.”
“I actually panicked,” the minister said during the episode titled OPEC Leadership. “I won’t lie about how I was during that moment.”
The flash point, just six months into Prince Abdulaziz bin Salman’s tenure, gave Saudi Arabia greater conviction to use its status as the world’s biggest oil exporting country. That was evident on April 2 this year, when Saudi Arabia led OPEC+ into announcing a surprise production cut of more than 1 million barrels a day, rocking global energy markets.
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“We got out of it with a heightened self-confidence and an unprecedented victory,” the minister said of the 2020 situation.
Back then, Prince Abdulaziz warned the crown prince his decision could send prices into “drastic and excessive decline” when markets opened and producer Saudi Aramco would need to offer discounts to ensure it had enough buyers. The ruler said to still go ahead and open the spigots.
The minister returned to a room of Aramco executives and told them, “Let’s do it then, I have instructions to do it,” he said in the episode. Mohammed Al Qahtani, Aramco’s head of downstream operations, stood up, and “I even saw a tear in his eye,” the minister said.
“It was a tear of pride and joy,” Prince Abdulaziz said. “He stood up and said, ‘This is the greatest day of my life.’ Then we all got up and — to be honest — we all applauded.”
Ultimately, Saudi Arabia’s brinkmanship worked. When OPEC+ met in mid-April that year, its members agreed to cut 9.7 million barrels a day — just below the initial proposal of 10 million.
“It wasn’t a matter of pricing, or a matter of profit or a matter of income,” the minister said of the 2020 decision. “Rather, it’s a matter of ‘To be or not to be’; who will be the master of this sector?”
