Meet Saudi Arabia’s Oil Prince Who Throws Tantrums When Prices Drop – You Won’t Believe His Reaction!

Prince Abdulaziz bin Salman spent nearly two decades as a relatively low-profile member of Saudi Arabia’s OPEC delegation. But since becoming the first royal to serve as the kingdom’s oil minister in 2019, he’s made a name for himself, albeit not his own choice: Traders have recently started calling him the “prickly prince.”

From the start of the oil price war with Russia in 2020 to contributing to the strained relations between the United States and Saudi Arabia last year, Prince Abdulaziz he has been an assertive steward of the kingdom’s oil policy, but plagued by a subtle tendency to react to slights.

To supporters, he is symbolic of a more self-confident Saudi Arabia under the de facto leadership of his half-brother, Crown Prince Mohammed bin Salman. They believe Prince Abdulaziz has responded well to many of the big market demands, bolstering Saudi influence in the oil market and its OPEC+ alliance with Moscow, which has endured despite Russia’s full-scale invasion of Ukraine.

For the prince’s detractors, however, he has a tendency to exaggerate and attack useless battles that make his central role of managing the price of oil, on which the economic hopes of the kingdom rest, more demanding.

The latest forceful move came this week when a number of journalists, including entire teams from Reuters and Bloomberg, were banned from a crucial meeting scheduled for Sunday at OPEC headquarters in Vienna. It’s the first time that Opecthrough decades of wars, price spikes and crashes, it shut out news organizations en masse.

Prince Abdulaziz’s decision stemmed, people close to the minister said, from his perception that his view of the market had not been given proper exposure. He believed this was contributing to the price of benchmark Brent crude oil falling towards $70 a barrel in recent weeks. But the decision also reflected, they said, a regal temperament unused to criticism and having no way with him.

Yet turning on the press was seen by some as a sign of desperation. As Saudi Arabia struggles to bend the oil market to its will, with prices falling despite two production cuts in eight months, accusing the messenger does not inspire confidence.

Raad Alkadiri, a veteran OPEC observer at Eurasia Group, said part of Saudi Arabia’s annoyance stemmed from what he saw as a mismatch between underlying market fundamentals – which OPEC can influence – and trader sentiment , which is a tougher beast to lock up .

“It can be argued that OPEC+ has managed the market quite well, but there is just sheer frustration that its fundamental management success has been repeatedly hammered by sentiment,” Alkadiri said. “This makes it difficult for OPEC to boost its credibility.”

For those close to the prince, there was a sense of disappointment. Many had predicted a strong oil market that would boost the revenue Crown Prince Mohammed needs to implement his economic reforms. Saudi Arabia requires oil prices above $80 a barrel to balance its budget, according to the IMF, and finance some of the “giga-projects” the crown prince hopes will transform his economy.

Prominent figures such as energy hedge fund manager Pierre Andurand predicted earlier this year that prices would surpass $100 a barrel as China’s economy reopened. The International Energy Agency and Opec itself also expect the market to contract significantly in the second half of 2023, which should boost prices.

But traders don’t seem to want to believe it. Prices rose only for short periods, such as when OPEC and its allies announced a voluntary production cut in April, before falling again.

That cut came straight from the playbook of Prince Abdulaziz, who likes to keep the market on its toes, an approach some say runs counter to OPEC’s desire to be a stable “oil central bank.”

Traders will be watching closely this weekend to see if Prince Abdulaziz pushes for further output cuts or other measures to prop up the price, or if the group takes a “wait and see” approach. The latter seemed very likely just a week ago, according to analysts and OPEC delegates, but the possibility of action has increased after prices fell again in recent days.

“Everything is up for discussion,” said a senior Opec Gulf delegate. “Nothing is clear yet.”

OPEC ministers met briefly on Saturday afternoon, ahead of the OPEC+ meeting – which will include Russia and other allies – where production policy will be decided. OPEC delegates said a cut of up to 1 million barrels a day was likely to be discussed on Sunday, but nothing was agreed.

Prince Abdulaziz’s only comment to the press on Saturday was to comment on the fine weather in Vienna. He left the OPEC headquarters smiling and holding hands with UAE minister Suhail al Mazrouei.

While people close to Prince Abdulaziz say he has remained generally in good spirits, with his dry humor on display, he has begun to let loose. He warned short sellers who bet against the price of oil – who he once said he’d be “damned as hell” if they doubted him – to “be careful” again last month.

He then spoke to the IEA, a group with which OPEC has spent years fostering dialogue to find common ground between oil producers and consumers, describing it as having a “special talent” for getting predictions wrong.

The danger for Saudi Arabia, traders say, is that Prince Abdulaziz has now effectively thrown down the gauntlet to oil speculators. If he doesn’t push for another output cut, prices could fall further.

If Saudi Arabia leads OPEC into cuts, there is no guarantee that Russia will follow, as Moscow tries to keep its exports going despite a series of Western measures designed to limit energy revenues flowing into its cash register. war.

“Further falls in the oil price towards $70 a barrel for Brent could increase the likelihood of another cut by some OPEC+ members. . . although Russia is unlikely to be one of them,” Citigroup analysts said.

One option is to change production baselines – the maximum level at which countries can produce, from which the size of individual production cuts derives – for OPEC+ members, according to two people close to the talks.

The UAE has it fraught in the recent past to what it deems to be a production baseline that underestimates its actual production capacity. A higher baseline would strengthen its position in OPEC in the long run, even if it agrees to cut further for now. However, some analysts believe that the issue is too controversial for Prince Abdulaziz to address and that it will be rejected.

“I don’t envy OPEC this weekend,” said Eurasia Group’s Alkadiri. “They’re caught between a rock and a hard place.”