Saudis talk tough on supply but market watches for U-turn
JUST over a year ago, Opec+ ministers gathered in the Saudi city of Jeddah and Khalid Al-Falih, the kingdom's oil minister, pushed to tighten the oil market.
"We have seen prices significantly higher in the past, twice as much as where we are today," Mr Al-Falih said in April 2018 as Brent traded at $73 a barrel.
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Fast forward a year and little has changed, at least on the surface. Speaking this weekend, Mr Al-Falih sent a very similar message - Opec and its allies need to maintain production cuts to reduce global inventories. While he avoided talking about prices this time, the subtext was clear: oil can rise further.
As oil traders size up the second half of 2019 - weighing plunging production in Venezuela and Iran against US shale's seemingly endless boom and a deepening trade war - they will bear in mind how last year panned out. Under pressure from both US President Donald Trump and Russian leader Vladimir Putin, Mr Al-Falih did a U-turn. He admitted price rises had gone too far and engineered a production increase at Opec's next full ministerial meeting in June.
Saudi officials say in private this year is different, but many oil investors think there's a risk the kingdom will retreat once again.
Oil prices gained strongly in the four months of 2019, reaching $75 in April as Venezuela's oil industry neared collapse and President Trump tightened the screw on Iran, but since then the rally has stalled.
In the first few hours after the Jeddah meeting, Brent futures in London jumped 1.7pc to $73.40 a barrel only to give most of the gains later on Monday morning.
"It is clear that Saudi Arabia is keen to protect the downside in oil prices, despite growing concerns about falling Iranian and Venezuelan supplies," said Amrita Sen, chief oil analyst at Energy Aspects.