Saudi Arabia's energy minister, Abdulaziz bin Salman, asserts that recent oil production cuts are based on global demand concerns, not a tactic to raise prices.
Saudi Arabia and Russia extended oil production cuts first made in July, contrary to the belief it was to raise oil prices.
Naturally, when that happened, everyone thought it was about prices. The Saudi budget needs higher prices than $70 per barrel of Brent crude. It needs it because the Crown Prince of the Kingdom has ambitious public spending plans aimed at reducing Saudi Arabia's dependence on oil revenues. In other words, like many an analyst citing demand concern after demand concern in the past eight months, Saudi Arabia's energy minister is worried about the demand side of the oil equation.
Indeed, it would be hard to argue with the official that supply and demand forecasts are not always accurate. It is enough to recall all the projections of massive Chinese economic growth this year, which could have fueled higher prices earlier in the year.
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