At the Qatar Economic Forum on 23rd May, Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, urged oil market speculators to “watch out.” “I keep advising that they will be ouching,” he continued, “they did ouch in April,” referencing the recent oil price spike following the Organization of Petroleum Exporting Countries (OPEC) voluntary cut at the beginning of April.
The minister’s words now lead market players to speculate that OPEC could pursue another output cut when it next meets, on 4th June, which would inevitably cause another rise in the oil price. The output cuts in November and April combined to a daily reduction of over 3.6 million barrels per day.
The aim of the OPEC output cuts is to counter recent market volatility. As of 23rd May, the oil price is down over 30% year-on-year following the rapid rise during Russia’s invasion of Ukraine. Market players believed the reopening of China would spur demand for oil; however, recent macroeconomic data shows that China is on the verge of deflation while manufacturing activity recently slipped into contraction territory.
As at the market close on 23rd May, the Brent crude oil price was $76.84/barrel, down 4.87% month-on-month.