OPEC chief talks about output cuts, price volatility, and Russia’s war in Ukraine and its effect on oil prices.

FM: Are you taking any steps to boost output or will you stick with the recently announced production target cuts? 

Lima: I think the approach that we have been having from the organizations, is a see-and-watch, and why I will say it is a see-and-watch is because there are so many uncertainties that is happening in the market, everything is changing by the week, by the month, by the day and what we do is we monitor what is going on in the market. I will give you the best example. The opening of China. Another example is the conflict between Russia and Ukraine. So really, all of those are the factors that we put together and once we do that, that’s when we evaluate what we need to do.

We want to remind you, one thing OPEC does not control is the price. What OPEC does is make sure that the supply and the demand are stable. So it is very important that we watch and we monitor and we make sure that the consumer … always receives the product. So at this moment to say that either the quota are going to go up or down, it is really irresponsible to do that. Let’s have first the data, let’s see what happens through the new opening of China, let’s see our future expectation of the product and then from there as a bloc we can make a decision.

FM: So, does this mean the issue of oil output policy will be discussed during the OPEC Joint Ministerial Monitoring Committee meeting on February 1?  

Lima: What I’m saying is not that it will not come up. There are many factors that we need to take into account including key members of OPEC like Venezuela, Iran, and Libya that have many [challenges] with production, you know one day they are producing and another day they have a problem. So before that meeting we have an internal meeting where we evaluate such things.

The way it’s looking at this moment, the world needs oil to be able to continue developing, to be able to continue growing so we need to make sure we can keep up the supply. And this is not just the OPEC members. This is also non-OPEC members and other ones. We will monitor what’s going on, we will have a meeting before our February meeting and for that February meeting we will make a decision of what we will do. But at this moment the way it is looking is that there is more requirement of this product than ever. So clearly we need to make sure we can keep supplying to the market. This product is much more necessary for economic recovery rather than restricting it.

FM: Then why is the United States accusing OPEC of slashing production to favour Russia?

Lima: OPEC is not a political organization. Secondly, OPEC does not have a spat with anybody. What OPEC does is gather information about the producer and we gather information about the consumers and then OPEC makes a logical decision. It is not political. It is not to favour either one country or another country. So when people say that we favour one and the other one is really irresponsible. It is not true, and clearly, we are looking after the consumers at the same time because you are to remember the one thing that everybody wants is a stable product.

When you have the stability of the products, you can manage a better economy. We want stability. If you have stability at $20, $80, $100, that’s what you want for a longer period because that’s what you can manage. So any issue about OPEC being against this or the other one really is more of a speculation. You have to remember one thing, the speculators are the traders. Those are really the key to who wants to make all that volatility of the price. OPEC does not want volatility. OPEC is there to evaluate the data and whatever the data tells us that’s when we act on.

FM: How has the Russia-Ukraine war affected the energy sector and the impact on the world economy?

Lima: I’m the president of OPEC but also the president of the Gas Exporting Countries Forum (GECF) so this is oil and gas and clearly. We have made our impact in gas but also in oil now. The issue is that some people think that it is very easy to replace production from one country to another country. so they can say OK I’m not buying from this I’m buying from the next one. But what they forget is that a lot of us, the producers, sign long-term agreements, and some of those long-term agreements are clients that have been very loved and loyal to us.

So when, for example, in Europe they say we want oil, we want gas, we are saying OK, first we have this long-term client in Asia that has been paying for all these years so you are telling us to take that product. So we are asking them to sign the same long-term contract as the other clients.

But what we want as a producer for a long time is that they provide investment. This is what we keep saying when people say that you should immediately stop investing in fossil fuels. It has an impact on our production. If you want to have stability in the economy, we need to invest back into the fuels.

I think for us all of the members of OPEC the solution is peace. The solution is not war because we need to create stability. In all these issues the only thing that is clear is volatility and we don’t want volatility. We want stability because in fuel stability you can invest through peace, you can develop, and you can grow. Clearly, it affects us. Also because Russia was a major supplier of refined products like diesel. So Russia not being able to send their diesel affects everybody. Our key message is that peace is the solution. The sooner we could have a resolution to this conflict, the better we can create this stability and keep growing and create employment.