Depleting Emergency Oil Stocks Will Have Painful Consequences: Saudi Minister

Tuesday, 25 October 2022 6:26 PM 

An aerial view of a crude oil storage facility is seen in Cushing, Oklahoma. (By AFP)

Saudi Arabia has blasted the release of emergency oil stocks describing as an attempt to “manipulate markets,” warning that losing emergency stocks may cause trouble in the near future, amid an escalating row with its ally, the US, over oil production.

“People are depleting their emergency stocks, had depleted it, used it as a mechanism to manipulate markets while its profound purpose was to mitigate shortage of supply,” said Saudi Energy Minister Prince Abdulaziz bin Salman at the Future Investment Initiative conference in Riyadh on Tuesday.

The minister said he should make it clear to the world “that losing emergency stock may become painful in the months to come.”

He stopped short of singling out the US, but his comments were interpreted as a veiled reaction to an announcement last week by US President Joe Biden, who said he was putting the final 15 million barrels on the market from a record release of US strategic reserves.

Biden’s plan to tap into the US’s emergency oil reserves comes as OPEC and its oil-exporting allies have announced a cut in oil production by two million barrels per day to boost prices.

OPEC + also refused to raise output to lower oil prices despite pressure from major consumers, including the United States.

The decision has angered the US, which claims Saudi Arabia and its OPEC allies are aligning with Russia amid its military offensive in Ukraine.

Saudi Arabia, however, has insisted that decisions by OPEC+ were taken “purely on economic considerations.”

The energy minister explained last week that the OPEC+  move was justified by a weak economic outlook and the need to preserve spare buffers.

Several member states of OPEC+ have expressed their endorsement of a recently agreed upon production cut.

Also at the event, the Saudi minister said there were “layers and layers of uncertainty” when it comes to both supply and demand and a “gloomier” outlook for next year, and that the best course of action was for OPEC+ to “mitigate” that uncertainty.

Last week, Biden issued a vague warning to Saudi Arabia over the cut in oil output capacity, pledging “consequences” and vowed to “take action.”

The Biden administration is grappling with serious concerns in the US, with gasoline prices at one point averaging more than $5 a gallon, causing nationwide outrage.

 In a strong expression of US anger at the OPEC+ move, Senate Foreign Relations Committee Chairman Robert Menendez called for freezing all US cooperation with Saudi Arabia following the OPEC decision.

Menendez claimed that the move serves to boost Russia in its war in Ukraine.

This is while certain Western countries, led by the Unites States, have supplied Ukraine with deadly weapons in its war with its neighbor, with the Kremlin threatening to use its leverage over energy supplies if the Western arms supply continues.