OPEC leader Saudi Arabia said that OPEC stands ready to cut production to correct a recent drop in oil prices caused by illiquid futures markets and macroeconomic concerns.
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman was quoted by the Saudi state news agency SPA as saying that OPEC+ has the means and flexibility to deal with challenges.
Prince Abdulaziz was quoted as saying the oil futures market has fallen into “a self-perpetuating vicious circle of very thin liquidity and extreme volatility,” making it prohibitively expensive for market participants to hedge and manage risk.
Oil prices surged more than $3/bbl on Tuesday after Saudi Arabia floated the idea of OPEC+ production cuts to support prices and the prospect of a drop in US crude inventories.
OPEC+ agreed to increase output by 648,000 b/d in both July and August, as they fully unwind nearly 10 million b/d of cuts implemented in May 2020 to counter the COVID-19 pandemic. The group agreed earlier this month to raise production quotas by another 100,000 b/d in September, as it faces pressure from major consumers such as the US.