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

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

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)
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.”



Saudi Budget Shows Continued Government Spending on Mega-Projects

King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
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Saudi Budget Shows Continued Government Spending on Mega-Projects

King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
King Abdullah Financial District in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s third-quarter budget results this year reflect the government’s commitment to boosting spending on mega-projects while working to increase revenue and contain the budget deficit.
Saudi Finance Minister Mohammed al-Jadaan stressed that managing the deficit is a key priority. He outlined strategies to ensure sustainable debt management, including directing debt to high-return sectors and attracting domestic and foreign investments.
The Ministry of Finance reported a budget deficit of SAR 30.23 billion ($8.06 billion) in the third quarter, down 15.6% from the same period last year. This brought the total deficit for the first nine months of the year to SAR 57.96 billion.
Government Spending and Revenues
Government revenues grew 20% in the third quarter to SAR 309.21 billion ($82.4 billion), while spending rose 15% to SAR 339.44 billion.
Non-oil revenues increased 6% year-on-year to SAR 118.3 billion, though they were 16% lower than in the previous quarter. Oil revenues climbed 30% year-on-year to SAR 190.8 billion but dropped 10% from the second quarter.
As of the third quarter, Saudi Arabia’s actual revenues for 2024 reached SAR 956.233 billion ($254.9 billion), a 12% rise from 2023.
Saudi Arabia’s spending topped SAR 1 trillion ($266.6 billion) by the end of the third quarter, a 13% increase from SAR 898.3 billion ($239.5 billion) a year earlier. The budget deficit for this period reached SAR 57.96 billion ($15.4 billion).
Saudi Budget Outlook and Reserve Update
The Kingdom’s Finance Ministry expects 2024 revenues to reach SAR 1.172 trillion ($312.5 billion), slightly below last year’s SAR 1.212 trillion ($323.2 billion). Expenditures are projected at SAR 1.251 trillion ($333.6 billion), with a budget deficit of SAR 79 billion ($21 billion), close to last year’s SAR 80.9 billion ($21.5 billion). By the end of the third quarter, the general reserve balance stood at SAR 390 billion ($104 billion), with the current account at SAR 76.7 billion ($20.4 billion) and public debt at SAR 1.157 trillion ($308.7 billion).
Vision 2030 Projects, Economic Reforms
Shura Council member Fadhel al-Buainain attributed the spending increase to Vision 2030 projects and social welfare programs, noting a 6% rise in non-oil revenues and a 16% boost in oil revenues.
He stressed that these gains contribute to financial stability and diversification efforts.
Enhanced Services and Growth Sectors
Dr. Mohammed Makni, Assistant Professor of Finance & Investment at Imam Muhammad ibn Saud Islamic University, highlighted the government’s focus on improving health, education, and quality of life, which are part of Vision 2030 goals impacting citizen services.
Speaking to Asharq Al-Awsat, Makni explained that Saudi Arabia’s recent expansionary spending aims to complete Vision 2030 projects.
He added that the third-quarter budget reflects positive growth across oil and non-oil activities, which have boosted revenues.
Economist Dr. Mohammed al-Qahtani pointed out that non-oil sectors and efficient spending helped reduce the third-quarter deficit.
He cited strong growth in tourism, culture, and entertainment as key contributors to non-oil revenues. Al-Qahtani expects continued improvement in the fourth quarter, especially if oil prices strengthen.