Saudi Arabia wants markets to remember that OPEC+ is in charge, energy analyst Amrita Sen told CNBC. “We’ve had mostly algos trading this market, and you’ve seen tremendous volatility,” she said. The Saudi government has signaled in recent days that OPEC+ may cut production. Something is loading.
Saudi Arabia is signaling to the oil market that OPEC+ is still firmly in control, a leading energy analyst told CNBC on Wednesday.
Saudi Energy Minister Prince Abdulaziz bin Salman told on Monday that OPEC+ could cut oil production as markets are currently experiencing “schizophrenia” and increasingly disconnected from fundamentals.
Energy Aspect’s chief oil analyst, Amrita Sen, echoed his warning of dysfunctional oil markets, noting that it “randomly hits the headlines” with even bullish news interpreted to the downside.
“We’ve had mostly algos trading this market, and you’ve seen tremendous volatility,” Sen said. “All Prince Abdulaziz is trying to say to the market is, ‘Listen, yes, there are concerns about a recession. Now there are even rumors or concerns about a potential return from Iran. But Saudi Arabia and OPEC+ will continue to make sure the market is stable.'”
Oil prices have fallen sharply in recent months and signs of progress over the past week on the Iran nuclear deal have added downward pressure. Analysts have estimated that reviving this deal would allow Iran to add about 1 million barrels of oil per day to world markets.
It was to this decline in oil prices that the Saudi energy minister sought to respond with this message: “OPEC+ still controls the market, and that should not be forgotten,” Sen said on Wednesday.
Bin Salman’s comments sparked a rise in oil prices this week that accelerated on Tuesday when OPEC+ officials said the group could potentially cut production if a possible deal on the Iran nuclear deal postpones its oil on the market.