Oil: the declaration of a Saudi minister raises prices, new multi-year records

“The crisis is somehow contained but it is not yet over,” said Abdelaziz ben Salman, Minister of Energy of the kingdom.

(illustration) ( Saudi Aramco / AHMAD EL ITANI )

Oil prices broke new multi-year records on Monday, October 25, thanks to statements by the Saudi Minister of Energy this weekend. This trend leaves little room for an imminent increase in supply from OPEC +. At the end of the morning in Paris, the price of a barrel of Brent from the North Sea for delivery in December garnered 0.53% compared to the close of Friday, at 85.98 dollars in London.

In New York, a barrel of West Texas Intermediate (WTI) for the same month appreciated 0.66% to 84.31 dollars.

“The Saudi Minister of Energy having indicated (Saturday) that the OPEC + would remain cautious about the increase of its production, the Brent and the WTI registered in rise from the beginning of the Asian exchanges”, notes Jeffrey Halley, analyst from Oanda.

Up to $ 84.76 for WTI shortly before 0300 GMT, a new high since October 2014.

At the same time, Brent reached $ 86.43, a first since October 2018. If it were to exceed $ 86.74, it would join WTI, also returning to levels more seen since October 2014.

“The crisis is somehow contained but it is not yet over, we must be careful not to take things for granted,” said Saudi Minister of Energy Abdelaziz bin Salman, interviewed by Bloomberg on the sidelines of the Saudi Green Initiative forum.

Market “still too fragile”?

The leader of the Alliance of the Organization of Petroleum Exporting Countries (OPEC) insisted on the still active presence of the virus in some parts of the world, citing Russia as an example.

Moscow is in fact preparing for an eleven-day shutdown of all its non-essential services (restaurants, beauty salons, clothing or furniture stores, gyms, etc.) from Thursday, in the hope of stemming the serious outbreak of the Covid-19 epidemic that is hitting the country.

Nigeria’s Oil Minister Timipre Sylva, also interviewed by Bloomberg on the sidelines of the forum, said the market was “still too fragile”. “In other words, one should not expect a further increase in supply beyond the expected level from OPEC + in the near future”, translates Carsten Fritsch of Commerzbank.

The producer cartel of which the two countries are part has opted for a measured increase in its production slashed from the first months of the pandemic. However, the recovery in demand is strong. Goldman Sachs analysts estimated in a note on Sunday that it “would soon reach its pre-Covid-19 level of 100 million barrels per day.”

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