Minister: Increasing demand for Saudi oil
He added that Kingdom is working to restore the balance between supply and demand to support oil prices
Saudi Minister of Energy, Industry and Mineral Resources, Khalid bin Abdulaziz Al-Falih has stressed that the Kingdom of Saudi Arabia's production of crude oil is witnessing high demand in most parts of the world.
He noted, in an interview with to the Saudi Press Agency (SPA) that the Kingdom is working to restore the balance between supply and demand to support oil prices.
The interview text reads as follows:
Q- Latest data show that Saudi oil production has gone up to 10.67 mb/d last month. What can explain this increase?
A- It has gone up in part to meet the increase in seasonal demand during summer and in part to meet higher demand from our customers. Despite the bearish sentiment engulfing the market, we still see strong demand for our crude in most parts of the world, especially as supply outside OPEC has been declining fast, supply outages increasing, and global demand still showing signs of strength.
Q- Last month, the supply figure of 10.75 was above that of production. Are you drawing down stocks?
A- There has been a modest stock drawdown last month, which is expected during this time of the year. But as the rebalancing process consolidates, we expect de-stocking to accelerate in all parts of the world providing support to oil prices.
Q- Is domestic consumption increasing this summer, as usual?
A- Domestic demand usually goes up during the summer due to increasing use of electricity for cooling. But this summer's increase is lower than that of previous summers. The efficiency program that we adapted during the last three years has started bearing fruits, especially that now efficiency measures have been combined with higher electricity and oil products prices, which had the desired effect of slowing demand growth.
Q- The price of oil has been going down in the past few weeks, are you trying to do something about it?
A- We’ve said before that market rebalancing is already taking place but the process of clearing crude and products inventories will take time. We are on the right track and prices should reflect that. But the large short positioning in the market has caused the oil price to undershoot.
However, this is unsustainable. To reverse the declines in investment and output, oil prices have to go up from the current levels. We are, in Saudi Arabia, watching the market closely, and if there is a need to take any action to help the market rebalance, then we would, of course in cooperation with OPEC and major non-OPEC exporters.
We are going to have a ministerial meeting of IEF in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilize the market.