Published — Wednesday 6 March 2013
Last update 6 March 2013 1:31 am
HOUSTON: Saudi Aramco Chief Executive Khalid Al-Falih told energy executives yesterday that global oil demand growth has moderated, largely because of environmental pressures and lifestyle changes, as well as energy policies.
The head of Saudi Arabia's national oil company also said increased output driven by technological advances – including rapid production growth in prolific US shale and tight oil plays - has helped quash concerns about oil supply.
Speaking at the annual IHS CERAWeek conference in Houston, he said Saudi Arabia, an OPEC member had maintained its maximum potential oil production at 12.5 million barrels per day, leaving its cushion of spare capacity unchanged at 2.5 million bpd.
"We have seen post-financial crisis a reduction of demand to where our spare capacity ballooned, but we have not abandoned that number we have committed to today - we're sitting on about 2.5 million barrels of capacity," Al-Falih said.
But healthy growth projections should not foster complacency in the oil and gas industry, Al-Falih said.
"Although we are on the right track, if our history teaches us anything, it is that such rosy forecasts will not always materialize," he said. "And as the old cowboy philosopher Will Rogers once said, even if you're on the right track, you run the risk of being run over if you just sit there."
Al-Falih warned about squandering financial resources, referring to the 2008 financial crisis that sent oil prices from nearly $150 a barrel to $ 33 a barrel in a few months.
"We need to heed the lessons of the past and better manage our risk," he said.
In the oil market, Brent crude bucked a five-day losing streak to rise to near $ 111 a barrel, as the North Sea Brent pipeline remained closed for a third day and investors bet on strong Chinese oil demand.
Brent crude oil rose 0.6 percent towards $ 111 per barrel while US crude added 41 cents to $ 90.53.