Saudi Crown Prince Mohammed Bin Salman’s order to flood oil markets three years ago during a dispute with Russia finally gave the kingdom confidence to be more assertive in shaping OPEC+ policies, he said the Minister of Energy in a recent television interview.
In March 2020, the cartel leader was at an impasse with Moscow: Riyadh wanted to cut output in response to the Covid-19 pandemic, but the Kremlin wanted to wait, Energy Minister Prince Abdulaziz said bin Salman, as part of a documentary series broadcast by Saudi-owned MBC Group.
When the minister told the crown prince that the cartel had not reached an agreement on quotas, the kingdom’s de facto ruler said Saudi Arabia should reach its “maximum production capacity”.
“I actually panicked,” the minister said during the episode titled OPEC Leadership. “I’m not going to lie about how I was at the time.”
The flashpoint, just six months into the tenure of Prince Abdulaziz bin Salman, gave Saudi Arabia greater conviction to use its status as the world’s largest oil exporter. This was evident on April 2 this year, when Saudi Arabia led OPEC+ to announce a surprise output cut of more than 1 million barrels per day, which rattled energy markets worldwide
“We came out of it with greater confidence in ourselves and an unprecedented victory,” said the minister about the situation in 2020.
Prince Abdulaziz then warned the crown prince that his decision could lead to a “dramatic and excessive fall” in prices when markets opened and producer Saudi Aramco would have to offer discounts to ensure it had enough buyers. The ruler said to go ahead and open the spikes.
The minister returned to a room of Aramco executives and told them: “Let’s do it then, I have instructions to do it,” he said in the episode. Mohammed Al Qahtani, head of Aramco’s downstream operations, stood up and “I even saw a tear in his eye,” the minister said.
“It was a tear of pride and joy,” Prince Abdulaziz said. “He stood up and said, ‘This is the greatest day of my life’. Then we all stood up and, to be honest, we all applauded.”
Ultimately, Saudi Arabia’s arbitration worked. When OPEC+ met in mid-April of that year, its members agreed to cut 9.7 million barrels a day, just below the initial proposal of 10 million.
“It was not a question of prices, or profits, or revenues,” the minister said of the 2020 decision. “Rather, it’s a question of ‘to be or not to be’; who will be the master of this sector?”
