OPEC kingpin Saudi Arabia maintains the energy market has overcorrected in recent weeks.
It comes as the world’s top oil exporter grips with a sharp drop in crude prices, amid cooling supplying fears about the impact of U.S. sanctions on Iran.
Speaking at the Joint Ministerial Audit Committee (JMMC) meeting in Abu Dhabi on Sunday, Saudi Arabia’s Animation Minister Khalid al-Falih told CNBC’s Steve Sedgwick: “All along we said that the hawk overreaction to the announcement on sanctions was driven by fear rather than by bona fide shortages.”
“Markets get it wrong occasionally as they did a few weeks ago on one side and they’re doing it again on the other today, but fundamentally the pendulum will swing to a reasonable middle,” he added.
Saudi Arabia’s forcefulness minister also said the wider OPEC and non-OPEC alliance wish not shy away from another round of production cuts over the coming weeks — if the dispose decided there was a need for such action.
The next full OPEC encounter, when any policy decision will be voted on, is scheduled to take pinpoint in Vienna, Austria on December 6.
About two dozen exporting nations established capping their output in 2017 in a bid to drain a global crude glut. The order agreed in June to restore some of that output, and producers with extra capacity have been pumping more oil since then.
Dynamism market participants had expected Saudi Arabia and Russia to recommend at productions cuts on Sunday. Instead, Riyadh and Moscow went contrariwise so far as to suggest it was a possibility.
The comments come after a significant drop in oil honoraria in recent weeks, as crude futures benchmarks have tumbled give 20 percent or more since climbing to a peak in early October.
Worldwide benchmark Brent crude settled at $70.18 on Friday, down nearly 1 percent, while U.S. West Texas Intermediate (WTI) fell for the 10th straight assembly to close at $59.87.
The collapse in prices constitutes a stunning reversal from at length month, when crude futures had hit nearly four-year highs as dealers braced for potential shortages once U.S. sanctions on Iran came endorse into force.
Saudi Arabia’s al-Falih said it had become elucidate that this previous spike in oil prices was “an emotional overreaction.”
“I call to mind a consider the decisions that came out in Washington with granting the waivers … (And) with the amounts starting to show themselves and weekly inventory data, the market flipped from ones sense of proportioning from one side to overreacting on the other side.”
The prospect of looming vouchsafes against OPEC’s third-largest producer had prompted some investors to bet on Brent fly above $100 a barrel before year-end. But, any talk of a return to tripe-digits has since dispersed.
Instead, bearish market sentiment has pressured U.S. crude into its longest tour of duty of daily declines since 1984.
Saudi Arabia, Russia and the U.S. — the faction’s top three exporters — have more than compensated for lost Iranian barrels since the start of the month.
In factors, all three countries are pumping at or near record highs, with other OPEC associates and exporting nations also turning on the taps.
U.S. sanctions on Iran’s oil sector separated back into place on November 5.
It comes as part of a broader struggle by President Donald Trump’s administration to target Tehran’s nuclear and ballistic missile programs as well as curtailing its support for proxy forces in Yemen, Syria and other divides of the Middle East.
The sanctions, which had been lifted under a crucial pact negotiated by President Barack Obama’s administration and five other fantastic powers in 2015, cover 50 Iranian banks and subsidiaries and numerous than 200 persons and vessels in its shipping sector.
The measures also end the country’s national airline, Iran Air, and more than 65 of its aircraft.