OPEC+ gives Saudi president power to intervene in market events

By: News Team

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OPEC+ members trust their chairman, Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud, to intervene whenever necessary to stabilize crude markets through the call for a meeting at any time if necessary, a Persian Gulf source with knowledge of the matter told Reuters.

OPEC and its allies, led by Russia, agreed on Monday to a small output cut of 100,000 barrels a day.

They scheduled the next OPEC+ meeting for Oct. 5, but the group said it could meet at any time to adjust production sooner, essentially empowering its chairman to address market developments when the need arises.

The source told Reuters that this flexibility would continue after October.

“Members have trusted that the president can step in when needed to bring more stability and this may be beyond October until the end of the (OPEC+) deal,” the source said.

Another OPEC source said the decision was made to control market volatility.

“Price movements up and down are a cause for concern,” the source said, adding that the group was not looking for a particular value.

OPEC has been eyeing wild swings in oil prices and its de facto leader Saudi Arabia last month signaled the possibility of production cuts to address what it sees as an exaggerated drop in crude prices.

The benchmark Brent contract has fallen to around $95 a barrel from $120 in June on fears of an economic slowdown and a Western recession.

Monday’s decision represents just 0.1% of global demand and essentially maintains the status quo, but it was an important statement for the market, the Gulf source said.

“Today’s cut is symbolic and is to send a message to the market that the group will use all the tools of its team to bring stability,” the Gulf source with knowledge of the matter said.

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