Saudi energy minister says market to remain oversupplied by March 2018

Saudi Arabia's Energy Minister Khalid al-Falih talks to journalists before the beginning of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, on May 25, 2017. (REUTERS/Leonhard Foeger/File Photo)
Updated 17 November 2017
0

Saudi energy minister says market to remain oversupplied by March 2018

BONN, Germany: The world will still have a surplus of oil by end-March next year, Saudi Arabia’s energy minister said on Thursday, signaling a willingness to extend output cuts when OPEC meets at the end of November on whether to extend caps well into 2018.
Khalid Al-Falih also said he did not want oil prices to rise too fast and too soon to shock consumers, adding that the exit from production cuts would be gradual to make sure market reaction is smooth.
“We need to recognize that by the end of March we’re not going to be at the level we want to be which is the five-year average, that means an extension of some sort,” he said, referring to inventory levels in the developed world.
“We have gone over 50 percent in reducing excess inventories but that means we still have some excessive inventories that we need to drain,” he told journalists on the sidelines of the UN climate conference in Bonn, Germany.
“We don’t want any spikes in price that shock the market. We don’t want any price movements that are unhealthy for demand. We don’t think we’ve seen any of that yet but that’s a potential especially if God forbid we have disruptions in any major country. We’re hopeful none of this will happen.”
Asked about the most recent spike in oil prices to a two-year high this month he said, “I am not distracted by short-term gyrations in prices and I certainly don’t spend time looking at hedge funds and the flows into financial investment instruments.”
Falih said it was too early to make an assessment on a possible extension to OPEC’s global oil output cuts now, but said Saudi Arabia favors making an extension decision at the next OPEC meeting at the end of the month.
“The November 30 meeting will be an important milestone to announce the way forward. My preference is to give clarity to the market and announce on November 30 what we’re going to do.”
He said Riyadh was in extensive consultations with all colleagues around the world within and outside OPEC.
Asked whether Russia was committed, Falih said: “I have had extensive consultations with my Russian colleagues and I will have some more in the next two weeks, but I know one thing is that the Russians are committed to working with Saudi Arabia and with the rest of the 24 countries that have come together last year.”
He said OPEC will have a better picture closer to the meeting on market fundamentals that will help in making the decision.
“We are waiting for October data to be fully developed and shared with the technical team,” Falih said.
“We’re also waiting for better projections of the fourth and first quarter which are typically lower demand and we will have picture of supply from sources that are not part of the deal. That will give us better predictions on when markets will balance as well as finishing the consultation.”
Asked how OPEC would deal with potential supply shocks to the market including from OPEC member Venezuela where oil production hit a 28-year low recently, he said OPEC’s reaction would depend on the length of the disruption.
“If anything is extended then we will take proper action to make sure that consumers around the world are not short of oil.”
“I assure you that nobody will be short of oil but at the same time we will not stop our current action until global inventories are rebalanced,” he said.

Exit strategy
Asked what OPEC’s exit strategy from the supply control deal was, Falih said it would be one of gradual adjustment.
“We’ve done our reduction in a gradual way at the beginning of this year and it has worked beautifully so far.”
“We will be very mindful when the agreement ends ... so that we don’t enter a period of excess supply that builds inventories again,” he added.
Falih said Saudi Arabia’s market share remains “healthy” despite the cuts to its exports.
“We’re still number one or number two in all the major markets that we target like Japan, China, Korea, India.”
But in the United States, he said, Saudi Arabia deliberately trimmed its supply because it was an oversupplied market. He said USexports were already at 2 million bpd and the Americas as a region is also a major producer.
“The US has access to Canadian, Mexican, Venezuelan, the US Gulf of Mexico and of course shale production.”
Saudi Arabia’s action in the United States was unique to the country but was not intended to be permanent.
“Once the supply curbs are lifted we’ll probably be back in the US to make sure that our customers receive Saudi crude.”


50 years after Concorde, US start-up eyes supersonic future

Boom Supersonic co-founder, Blake Scholl, poses for a photograph in front of an artists impression of his company's proposed design for an supersonic aircraft, dubbed Baby Boom, at the Farnborough Airshow, south west of London, on July 18, 2018. (AFP)
Updated 22 July 2018
0

50 years after Concorde, US start-up eyes supersonic future

  • Boom Supersonic’s aircraft is expected by the company to fly for the first time next year
  • The Concorde was retired following an accident in 2000 in which a Concorde crashed shortly after takeoff from Paris, killing 113 people

WEYBRIDGE, United Kingdom: Luxury air travel faster than the speed of sound: A US start-up is aiming to revive commercial supersonic flight 50 years after the ill-fated Concorde first took to the skies.
Blake Scholl, the former Amazon staffer who co-founded Boom Supersonic, delivered the pledge this week in front of a fully-restored Concorde jet at the Brooklands aviation and motor museum in Weybridge, southwest of London.
Boom Supersonic’s backers include Richard Branson and Japan Airlines and other players are eyeing the same segment.
The company aims to manufacture a prototype jet next year but its plans have been met with skepticism in some quarters.
“The story of Concorde is the story of a journey started but not completed — and we want to pick up on it,” Scholl said.
The event coincided with the nearby Farnborough Airshow.
“Today... the world is more linked than it’s ever been before and the need for improved human connection has never been greater,” Scholl said.
“At Boom, we are inspired at what was accomplished half a century ago,” he added, speaking in front of a former British Airways Concorde that flew for the first time in 1969.

Boom Supersonic’s aircraft, dubbed Baby Boom, is expected by the company to fly for the first time next year.
“If we can’t continue where you left off, and build on that, then the shame is on us,” Scholl said, addressing himself to an audience that included retired Concorde staff.
“Our vision is to build a faster airplane that is accessible to more and more people, to anybody who flies.”
Boom Supersonic is making its debut at Farnborough and hopes to produce its new-generation jets in the mid-2020s or later, with the aim of slashing journey times by half.
The proposed aircraft has a maximum flying range of 8,334 kilometers (5,167 miles) at a speed of Mach 2.2 or 2,335 kilometers per hour.
If it takes off, it would be the first supersonic passenger aircraft since Concorde took its final flight in 2003.
The Concorde was retired following an accident in 2000 in which a Concorde crashed shortly after takeoff from Paris, killing 113 people.
Some analysts remain skeptical over the push back into supersonic.
“Supersonic is not what passengers or airlines want right now,” said Strategic Aero analyst Saj Ahmed, stressing that many travelers wanted cheap low-cost carriers instead.
Ahmed said supersonic jets were “very unattractive” because of high start-up development costs, considerations about noise pollution and high prices as well as limited capacity.

Independent air transport consultant John Strickland also noted supersonic travel was unproven commercially.
“Business traffic, on the face of it, is the most lucrative for airlines,” Strickland told AFP.
“But if there is an economic downturn or something happens where the market for business class traffic drains away, then you have nothing else left to do with that aircraft.
“I think it’s going to be some time before we see whether it can establish a large viable market... in the way that Concorde never managed to do.”
These concerns have not stopped interest from other players.
US aerospace giant Boeing had last month unveiled its “hypersonic” airliner concept, which it hopes will fly at Mach 5 — or five times the speed of sound — when it arrives on the scene in 20 to 30 years.
And in April, NASA inked a deal for US giant Lockheed Martin to develop a supersonic “X-plane.”