Saudi Oil Minister Predicts Higher Demand for Oil
Ibrahim al-Muhanna, Saudi Arabia’s oil minister said the decline in oil prices is “temporary,” and crude is steadying at $55–60/bbl amid stronger global demand.
The oil Minister made this remark in a speech he gave in Riyadh, adding that economic expansion in the U.S. and many developing countries together with growth in populations and middle-class affluence will propel demand for oil for the next 10 years.
“I’m very optimistic about recovery of oil prices. The world’s current political, economic or petroleum problems are temporary, and their effect on the whole world system is limited”, al-Muhanna, a senior adviser to the Saudi oil minister, Ali al-Naimi, said without giving a date for any increase.
It will also be recalled that Saudi Arabia, the world’s biggest oil exporter, led the Organization of Petroleum Exporting Countries last year in refusing to cut output in a bid to protect market share in the face of growing production from non-OPEC producers.
The oil rich kingdom boosted oil output in March to 10.3 MMbpd, the highest in at least 12 years, al-Naimi said on April 5.
Brent crude, a benchmark for half of the global oil trade, has declined 45 per cent in the last 12 months. Futures were trading at $56.77/bbl, up 2.2 per cent, Thursday at 2:30 p.m. on the London-based ICE Futures Europe exchange.
Oil consumption increased last year by 700,000 bpd, short of expectations that demand would rise by more than 1 MMbpd, al-Muhanna said.
Al-Muhanna noted that speculation about a price war among Saudi Arabia and other producers helped push crude lower, adding that Saudi Arabia sets its crude prices based on refining margins and not politics.
