Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has issued a stern warning to speculators who are betting on oil prices falling ahead of a crucial OPEC+ meeting on June 4. He said he would inflect more pain on short sellers and told them to watch out.
“Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don’t have to show my card I’m not a poker payer…but I would just tell them watch out”, he told the Qatar Economic Forum organized by Bloomberg on Tuesday.
Short sellers are investors then bet on oil price falling, and hence when an unexpected move by OPEC+ to cut production causes a rally, they are forced to close their position at a loss.
Saudi Arabia, the world’s largest oil exporter, and other OPEC+ producers announces surprise voluntary cuts in April that lifted prices after a slump driven by concerns that a banking crisis could impact demand.
Analysts at Standard Chartered bank said in a note this week that short speculative positions are now as bearish as they were at the start of the pandemic in 2020.
“We think the latest build-up in short positions significantly increases the probability of further production cuts when OPEC+ meets”, the analysts said.
Brent princes were trading 1.3% higher at just under $77 a barrel at 1300 GMT, about $10 below their peak OPEC+ announced the additional cuts in April.
OPEC+ members are due to meet on June in Vienna to decide on their next course of action. The April cuts were described as “inadvisable” by Washington, which has also been critical of the group’s decision to cut production in October.
The minister said the alliance would continue to be pro-active, pre-emptive and hedge against what may come in the future, regardless of any criticism.
“We should be brave enough to attend to the future without continuing the so-called “kicking the can” policies, those policies that may allow us to find the situation for this month, next month or the month after but with that we are losing sight of our intentions and our more important objectives”, he said.
He again blamed the Paris-based International Energy Agency (IEA) and its initial predictions for a 3 million barrel per day (bpd) fall in Russian production on the back of the Ukraine war for misleading the market.
“Look who did the most in trying to bring forecasts and data and projections that really created most of the volatility that we have had in 2022 and continue to do so?” he said.
