Saudi Arabian energy minister Prince Abdulaziz bin Salman arrives for the Opec meeting in June
Saudi Arabia, Opec+ and oil price formation
Why does a Saudi production cut of a million barrels fail to drive prices higher?
Opec leader Saudi Arabia announced in early June a unilateral cut in oil production of 1mn bl/d from July. In addition, the wider Opec+ group announced a plan to limit oil supply to the end of 2024. So why did the market hardly move? At the heart of the problem is a narrative that fails to understand global price formation in the oil markets. Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, believes oil prices are driven by speculators, who drive prices well below the ‘fundamental’ levels supposedly determined by supply and demand. It is true that the absolute price level of oil is driven entirely by the financial market participants and not those who trade physical oil. Using th
Also in this section
13 March 2026
Brussels is again weighing a cap on gas prices amid the Hormuz crisis, but the measure could backfire by deterring the LNG cargoes Europe urgently needs
12 March 2026
Emergency oil stocks provide a last line of defence to oil market shocks, so the IEA’s unprecedented 400m bl release represents something of a double-edged sword
12 March 2026
LPG could rapidly expand access to clean cooking across Africa and prevent hundreds of thousands of deaths from indoor air pollution each year, but infrastructure shortages and regulatory barriers are slowing investment and market growth
11 March 2026
Missiles over Dubai and disruption in Hormuz are testing the emirate’s reputation—and shaking the energy hub at the centre of the Gulf economy
