Oil gets boost as new Saudi minister commits to output cuts

Oil prices rose on Monday after the new Saudi energy minister, Prince Abdulaziz bin Salman, confirmed expectations that there would be no radical change in his country’s oil policy.

Prince Abdulaziz, son of Saudi King Salman and a long-time member of the Saudi delegation to the Organisation of the Petroleum Exporting Countries, replaced Khalid al-Falih on Sunday.

Global benchmark Brent crude futures were up 69 cents at $62.23 a barrel by 1343 GMT, while US West Texas Intermediate gained 95 cents to $57.47.

Speaking on Monday, Prince Abdulaziz said the pillars of Saudi Arabia’s policy would not change and that a global deal to cut oil production by 1.2 million barrels per day would survive.

He added that the so-called OPEC+ alliance between OPEC and non-member countries including Russia, a partnership he helped cement, was staying for the long term. He declined to comment on oil prices.

Russia’s oil output in August exceeded its quota under the OPEC+ agreements.

OPEC oil output in August rose for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by US sanctions on Iran.

Abdulaziz also said the kingdom’s aim was for an Initial Public Offering of Saudi Aramco to happen “as soon as possible”.

“I expect no deviation from Saudi policy. If anything, maybe more of a push in the direction of getting inventories down and getting the market into shape for the (Aramco) IPO,” said Robert Ryan, Chief Energy Strategist at BCA research.

The United Arab Emirates’ energy minister, Suhail bin Mohammed al-Mazroui, said on Sunday that OPEC and non-OPEC producers were “committed” to achieving oil market balance.

The OPEC+ deal’s joint ministerial monitoring committee meets on Thursday in Abu Dhabi.

Trade and geopolitical tensions are affecting the market, Mazrouei said, but he was quick to rule out hasty steps influenced by the trade war between the United States and China.

“The fear of slower (oil) demand is only going to happen if that tension is escalating and I am personally hopeful that is not the case,” Mazrouei told Reuters.

Prices on Monday were also supported by a rise in oil imports in China in August, with shipments to the world’s biggest importer up 3% from July and nearly 10% higher in the first eight months of 2019 from a year earlier.

S&P Global Platts said it would launch new price assessments for US crude for Asian buyers from October 1, as the United States exports more oil to the East.

In the United States, drilling companies cut the number of operating oil rigs for a third week.