Saudi oil minister sees growing producer consensus to stabilize market

Greater cooperation between Russia and Saudi Arabia as part of OPEC+ policy could lead to greater investment opportunities and trade between Riyadh and Moscow. (Shutterstock photo)
Updated 04 June 2019

Saudi oil minister sees growing producer consensus to stabilize market

  • Kingdom’s oil ministry ‘closely monitoring’ series of global situations that have led to volatility in the market
  • 3% Oil prices retreated more than 3 percent on Friday, with May seeing the biggest monthly loss in six months

LONDON: The Saudi oil minister, Khalid Al-Falih, claimed there was an emerging consensus among OPEC+ oil producers over a need to ensure market stability, in an exclusive interview with Arab News.

The disclosure comes ahead of a key meeting of oil producers later this month which is set to deter- mine whether existing produc- tion cuts will be extended beyond June.

“We will do what is needed to sustain market stability beyond June,” said Al-Falih. “To me, that means drawing down inventories from their currently elevated levels.”

Oil prices had their worst monthly fall in the last six months in May as mounting global trade tensions weighed on prices and offset the upward pressure on crude created by supply disrup- tions and sanctions on Venezuela and Iran.

“Increasing trade friction and potential barriers would certainly have a negative impact on the global economy and oil demand growth,” said Al-Falih.

“The Kingdom is closely monitoring recent developments in the oil market, which exhibited an elevated level of volatility in recent weeks. And these levels are totally unwarranted in light of both the current market funda- mentals, which remain healthy, and the high levels of discipline by OPEC+ producers,” he added.

The minister emphasized the importance of the Saudi- Russia relationship in achieving a balanced global oil market, and said that ties between the two countries went beyond the energy sector.

“The Kingdom’s relationship with Russia extends beyond oil and OPEC+,” he said. “From the Public Investment Fund’s collab- oration with the Russian Direct Investment Fund ... to industrial investments in petrochemicals in Russia and the Kingdom ... to joint research in the energy field, manifested in the establishment of the Saudi Aramco research center at Moscow University ... to potential wheat imports to the Kingdom.

“In fact, I would emphasize that some of the premier Russian companies are considering investments in the Kingdom, and in addition to this, Aramco and SABIC are considering investments in promising gas and petrochemical projects in Russia.”

One such potential investment involves Russia’s largest integrated petrochemicals company, SIBUR, exploring the construction of a $1 billion natural rubber and specialty rubber joint-venture plant in Saudi Arabia, together with Saudi Aramco and French firm Total.


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.