Saudi Arabia’s energy minister said the lack of new investment in exploration and exploitation could trigger a new super cycle of global oil prices.
Saudi prince Abdulaziz bin Salman said at the Robin Hood Investor Conference on Wednesday that his job is to prevent such a super cycle, people familiar with the matter said. He used to warn speculators about the dangers of shorting.
The speech marked his attempt to speak directly to Wall Street, a rare speech by members of the Saudi royal family to hedge fund audiences. Former oil ministers tend to discuss behind closed doors with influential market voices such as commodity hedge funds.
“I think it’s my job and others’ to make sure this super cycle doesn’t happen,” he said. He also warned of the risk of a super cycle due to a “lack of investment.”.
In the wake of successive oil depressions, some state-owned oil companies and international exploration companies have cut their exploration and production budgets to save cash and avoid new oversupply. Many people, including Prince Abdulaziz, worry that excessive capital spending cuts could lead to tight oil supply in the face of a rebound in demand.
(super cycle refers to the abnormal long-term and large-scale rise of commodity prices for a long period of time.)