Oil rises as new Saudi minister commits to output cuts

Current Saudi Oil Minister Introduces Cuts Along With Leap

Current Saudi Oil Minister Introduces Cuts Along With Leap

Saudi Arabia's new energy minister said his country wants to pursue a "full cycle" nuclear program, which would entail the kingdom processing and enriching its own uranium.

In his first comments since being appointed by his father King Salman on Sunday, the minister signaled no major change in approach in Saudi Arabia, the de facto OPEC leader which pumps about a third of the cartel's oil.

Aramco is preparing to sell up to a 5% stake by 2020-2021, in what could be the world's biggest IPO.

Al-Falih, who reportedly pushed back against the IPO, had been the face of OPEC diplomacy over the past three years in a struggle to counter the rising tide of USA shale oil that flooded markets.

Prince Abdulaziz said that the trade war, which has triggered fears of a global recession, has cast a "fog" over the oil market.

West Texas Intermediate, the United States benchmark, added 1.3 per cent to trade at US$57.20. Prices have gained about 15% so far this year.

The Opec+ deal's joint ministerial monitoring committee will meet on Thursday in Abu Dhabi. "The price reaction is muted because we don't expect a strong change". But the prince's more prominent role in the last two years - active at OPEC meetings and leading talks with Kuwait - suggests they'd become closer in the run-up to his promotion.

Prince Abdulaziz says "it's all about the incremental contributions".

To keep oil prices from sliding even further, al-Falih led Saudi Arabia's curb on production in OPEC and the oil cartel's agreement with other major oil producers, like Russian Federation, to cut production in past years.

Monthly passenger vehicle sales log worst-ever drop in August
Total two-wheeler sales in August declined 22.24% to 15,14,196 units compared to 19,47,304 units in the year-ago month. Commercial vehicle sales were down 38.71 per cent to 51,897 units in August compared with 84,668 units in August 2018.

OPEC and its allies, known collectively as OPEC+, are scheduled to meet on September 12 in Abu Dhabi to review their strategy to help balance global oil markets.

Until Prince Abdulaziz's appointment late on Saturday night, Saudi Arabia's oil ministry has been since 1960 headed by civilian technocrats.

The veteran oil man's dismissal is indicative of Crown Prince Mohammed bin Salman's ruthless style of rule as he spearheads a highly ambitious economic reform programme.

An Aramco IPO, which at one point was expected to value the company at $2 trillion and raise $100 billion, would help the kingdom raise the money it needs to upgrade its military and deliver on Crown Prince Mohammed Bin Salman's social agenda.

"The new minister is highly experienced and knows his subject better than just about anyone in the country", said Joseph Kechichian, senior fellow at the King Faisal Center for Research and Islamic Studies in Riyadh.

Despite MbS's attempts to diversify the economy away from oil, the crude price remains the single most important influence on the health of the Saudi economy.

Bin Salman's remarks, which marked his debut since being named to one of the most important positions in the kingdom the previous day, have spooked nonproliferation experts, who warn such technology could allow Saudi Arabia to pursue a nuclear weapon amid heightened tensions between Iran and the United States over Tehran's program. He headed a team of ministry officials and Aramco executives to lay out and update the kingdom's oil strategy, according to the ministry's website. He expressed concern in January at an energy forum in Abu Dhabi over the "range of volatility" in oil prices seen over the past two to three years.

"If you look at oil from a macro perspective I don't think at the moment we're facing a supply issue", he told Bloomberg TV.

The Saudi economy has struggled with subdued growth since the slump in oil prices in 2015.

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