Saudi Aramco CEO says oil market to rebalance soon

While many short- and long-term factors are affecting the oil market every day, the industry is moving towards rebalancing, Saudi Aramco chief executive officer Amin Nasser said Thursday.

“Now we see occasional inventory bouncing instead of the consistent upward trend witnessed previously,” he added at the International Oil Summit 2017 in Paris. “There has also been a rapid drawdown of floating storage during the first quarter of this year. This returning confidence is being driven by improving fundamentals, and accelerated by the production agreement reached last year.”

As the global economy is forecast to double in size by 2050, this higher demand will be met by using all energy resources, especially oil and gas. In fact, an estimated 30 million barrels per day of oil production capacity needs to be developed over just the next five years, he said.

So while the short-term market points to an oil surplus, the supplies required for the years ahead are falling behind due to several challenges, one of which is that large long-term investments in energy sources are not being made.

Cost is is a challenge, so all producers must work toward a strategy of efficiency that makes businesses more profitable even in weak market conditions, he said, adding that the “building blocks” of how oil producers conduct their businesses must be addressed; such as business models and competiveness.

The CEO of the world’s largest oil exporting company also addressed climate concerns.

“Following the historic signing of the Paris Agreement – which Saudi Arabia ratified last year – Saudi Aramco is playing a key role in supporting the Kingdom’s contributions. We will also help to transform the Kingdom into a global solar powerhouse.”

In partnership with European automakers, Aramco is developing efficient engine technologies like Gasoline Compression Ignition to reduce the transport sector’s greenhouse gas emissions across the Kingdom.

“If we can meet these challenges head-on, the stage is set for oil to remain a crucial part of the global energy mix for a long time to come.” Nasser added. 

Write to Rasha Abo AlSoud at rasha@argaam.com