Opec+ is fighting against “uncertainties and sentiments” in the market that is behaving against the fundamentals and forcing oil producers to take precautions, Saudi Arabia’s Energy Minister has said.

“I think the physical market is telling us something and the futures market is telling us something else,” Prince Abdulaziz bin Salman told the 10th China-Arab Business Conference in Riyadh on Sunday.

“That’s why we keep taking these precautionary measures.”

On Sunday, Opec+ members Saudi Arabia, the UAE, Iraq, Kuwait, Oman and Algeria said they would extend their voluntary oil production cuts until the end of 2024 as economic growth concerns weigh on the outlook for crude demand.

Saudi Arabia, the world’s largest crude exporter, also said it would make an additional voluntary output cut of a million barrels per day next month, which could be extended if required, Prince Abdulaziz said last week.

“This is a Saudi lollipop,” he told a news conference at the time.

Oil prices ended lower on Friday and posted a second week of losses on demand concerns and a report that the US and Iran are edging closer to an interim nuclear deal.

Brent, the benchmark for two-thirds of the world’s oil, slid 1.54 per cent, or $1.17, to settle at $74.79 a barrel. West Texas Intermediate, the gauge that tracks US crude, closed down 1.57 per cent, or $1.12, to $70.17 a barrel.

The group has total production curbs of 3.66 million bpd, or about 3.7 per cent of global demand, in place, including a 2 million bpd reduction agreed on last year and voluntary cuts of 1.66 million bpd announced in April.

Crude prices are trending lower despite the International Energy Agency predicting global crude demand to hit record levels this year on the back of an economic recovery in China.

The group countries need to remain vigilant and proactive to ensure oil market stability as they are dealing with “volatile situations” that have been generated and created by situations that “we have nothing do with” he said in Doha last month.

“To understand Opec+ today, it’s all about being proactive, pre-emptive and precautionary,” he said in Riyadh.

The minister said the latest Opec+ output caps decision involved “comprehensive reform and it would be rewarding producers who are investing to grow their crude production capacity”.

“In the final analysis what this agreement will achieve for all of us is that those who invest, not this year, but years to come in 24, 25 and moving forward, there will be a recognition for their investment because they will be given higher production allocations,” he said.

“Investors working with countries, just to name few, Algeria, Iraq and the UAE … will see the merits for investing in these countries simply because the pendulum has swung to those who are investing.”

Updated: June 11, 2023, 6:16 PM