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Saudi Energy Minister: We’ll Have to See Demand on Oil Before Offering Supply

Saudi Energy Minister: We’ll Have to See Demand on Oil Before Offering Supply

Friday, 4 June, 2021 - 07:15
Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak at a session during Russia’s St. Petersburg Economic Forum on Thursday, June 3, 2021. (Reuters)

It would be premature to talk about potential overheating in the global oil market before seeing higher demand, Russia’s RIA news agency quoted Saudi Energy Minister Prince Abdulaziz bin Salman as saying on Thursday.

“There will always be a good amount of supply to meet demand, but we’ll have to see demand before you see supply,” he said when asked about the overheating risk at the St. Petersburg economic forum in Russia.

Russian Deputy Prime Minister Alexander Novak, for his part, said on Thursday it was premature to talk about output decisions due to be made by the so-called OPEC+ group of oil producers in August.

Novak said the group would look at seasonal demand growth and consider the potential return of Iranian oil supplies to the market.

Current oil prices reflect the balance between supply and demand and are unlikely to rise further in the short term, he added. “The current oil price is good enough for Russia,” he further noted.

In related news, top oil exporter Saudi Arabia has raised the July official selling prices (OSPs) of most crude grades it sells to Asia, a pricing document showed on Thursday.

It set the July OSP for the flagship Arab light crude at $1.90 a barrel above the Oman/Dubai average for Asia, up 20 cents from June.

It also set its Arab Light OSP to northwest Europe at a discount of $1.90 a barrel against ICE Brent for July, compared with a discount of $2.90 for June, according to the document seen by Reuters.

The OSP to the United States was set at a premium of $1.05 a barrel over Argus Sour Crude Index (ASCI), unchanged from June.

Oil prices rose for a third day on Thursday on expectations for a surge in fuel demand later this year at the same time major producers are maintaining supply discipline.

Brent crude futures were up 11 cents, or 0.15 percent, at $71.46 a barrel by 1327 GMT, the highest since September 2019. The international benchmark gained 1.6 percent on Wednesday.

US West Texas Intermediate crude futures rose eight cents, or 0.12 percent, to $68.91 a barrel. Prices earlier rose to as much as $69.40, the most since October 2018, after gaining 1.5 percent in the previous session.

Oil prices have risen in recent days on expectations from forecasters, including the Organization of the Petroleum Exporting Countries (OPEC) and its allies, that oil demand will exceed supply in the second half of 2021.

OPEC+ data showed that by the end of the year oil demand will be 99.8 million barrels per day (bpd) versus supply of 97.5 million bpd.

This rebalancing will be led by resurgent demand in the United States, the world’s biggest oil user, from vehicle consumption this summer, along with rising fuel needs in China, the world’s second biggest oil consumer, and in the UK as it exits its COVID-19 lockdowns.

“The US driving season is a period that sees higher than normal fuel consumption. UK traffic is now sitting above pre pandemic levels,” CBA commodities analyst Vivek Dhar said in a note.

“We continue to see the oil demand recovery led by the US, Europe and China.”

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