OPEC+ oil group awaits concrete rate cut: Saudi energy minister | Wilnesh News

Saudi Arabia’s energy minister said the prominent OPEC+ alliance of oil producers was waiting for concrete central bank action on interest rates before considering the potential impact on energy demand patterns.

“With all due respect, central banks ( erratic in the message it conveys.” It comes at a time when central banks are trying to curb rising consumer prices and shyly gradually lower interest rates.

Earlier on Sunday, the OPEC+ grouping of the Organization of the Petroleum Exporting Countries and its allies agreed to extend official production cuts until the end of next year. Two additional tiers of voluntary production cuts will be implemented as part of the alliance: The eight-country group will extend a 1.7 million barrels per day cut until 2025, and a 2.2 million barrels per day cut. End of season three.

The production strategy decision comes after OPEC’s own forecasts showed demand would increase by 2.25 million barrels per day, according to its monthly oil market report for May. The upcoming summer driving season and the end of refinery maintenance in China will also intensify demand for crude oil in the short term.

Global energy costs have soared following Russia’s full-scale invasion of Ukraine, exacerbating the economic recession following the Covid-19 pandemic. Global agencies have previously cited energy prices as the basis for inflation concerns. In turn, rising inflation has depressed oil demand.

As central banks relentlessly battle sticky inflation, expectations are rising about the timing and number of rate cuts that central banks around the world might cut. The European Central Bank is widely expected to implement a long-awaited interest rate cut at its June 6 meeting, although euro zone inflation recently rose to 2.6% in May from 2.4% in April.

The Fed is also expected to ease policy in the near term, but a recent string of stronger-than-expected economic data and signs from policymakers have dimmed those prospects.

Amid continued ambivalence, Saudi Arabia’s Abdulaziz bin Salman said: “Let me see which central bank governor is determined to provide people with guidance on when, where and how to lower interest rates. trajectory.” He emphasized that the organization is waiting for “more certainty on the overall economic trajectory, which may lead to an increase in demand in a clear way.

The OPEC+ alliance has stated many times that it will respond promptly and flexibly to changes in the oil market as needed. On Sunday, Saudi Arabia’s energy minister argued that the alliance’s latest production strategy was based on current market conditions.

“Just like today, we think this is something that requires us to be clear to the market about what signals we are sending, and it’s critical that people use what we’re doing as an example,” he said.