Copyright Andrew Burton, Getty Images

Aramco Sees Oil Market Balanced as United Arab Emirates Dismisses Shale Threat

Nov. 26, 2017
Demand for crude is continuing to rise and oil inventories are returning to the levels of the past five years, according to Aramco CEO Amin Nasser.

Global crude inventories are declining and supply and demand are in balance, according to the head of Saudi Aramco, while the United Arab Emirates energy minister said U.S. shale oil doesn’t threaten OPEC’s efforts to support the market.

Demand for crude is continuing to rise and oil inventories are returning to the levels of the past five years, Aramco Chief Executive Officer Amin Nasser said Sunday in the eastern Saudi city of Dhahran. “This is helping prices improve,” he said, as the Organization of Petroleum Exporting Countries and allied suppliers prepared to gather this week in Vienna to assess the market.

U.A.E. Energy Minister Suhail Al Mazrouei said he’s optimistic the producers will extend their deal on output cuts when they meet on Nov. 30. Shale oil represents only a fraction of global production and “is not an enemy to OPEC,” he told reporters in Abu Dhabi, referring to the U.S. deposits that contributed to a worldwide glut.

OPEC and Russia have outlined a deal to extend their oil production limits to the end of next year, though both sides are still working out crucial details, according to people involved in the conversations. The cuts, which took effect in January, will expire in March unless OPEC and its fellow producers extend the historic accord. Participants in the deal collectively pump 60% of the world’s oil.

Aramco’s ‘Optimism’

Benchmark Brent crude has gained 12% this year and ended London trading on Friday at $63.86 a barrel, up 31 cents. Prices tumbled from more than $115 a barrel in 2014 amid a surge in supplies, including U.S. shale oil.

“There’s no doubt about our optimism on the oil market -- the balance between supply and demand is very good,” said Nasser, head of the state producer known formally as Saudi Arabian Oil Co. “What we are seeing today is that prices are in continuous improvement.”

Oil markets are on track to come into balance next year, Al Mazrouei said. The U.A.E., which takes over OPEC’s rotating presidency for 2018, will seek to ensure that members adhere to any decision on cuts that they may agree to at their meeting in Vienna, he said.

The U.S. produced about 4.25 million barrels a day of crude directly from tight oil resources last year, according to estimates by the Energy Information Administration. Output from U.S. oil fields, including shale, is set to more than double this year and rise to 9.9 million in 2018, the EIA said in its short-term energy outlook earlier this month.

By contrast, OPEC pumped 32.6 million barrels a day in October, according to data compiled by Bloomberg. Russia produced 10.2 million barrels a day in September, according to OPEC data.

By Abbas Al Lawati and Mahmoud Habboush

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!