The global oil market is moving closer to balance even as increases in US oil production push prices down in the short-term, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said.
“This is not a good indication of where the market is likely to be headed going forward, as the large new production capacity and investment we will need in the future are lagging,” Nasser said during an event at Columbia University in New York Friday. “While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind.”
Many indicators are pointing to a more balanced market, Nasser said. The combined inventories of countries in the Organisation for Economic Cooperation and Development are flattening and poised to drop, among other signs that the market is tightening, he said.
Saudi Arabia, the Organisation of Petroleum Exporting Countries’ biggest producer, is cutting output as it leads efforts to eliminate a global crude glut and bolster prices. The country produced almost 10 million barrels a day in March, it reported to OPEC. All the country’s oil was pumped by Saudi Aramco, as the company is known.
Aramco, which has agreed to pay Royal Dutch Shell Plc US$2.2 billion to break up a 19-year refining partnership known as Motiva Enterprises LLC, is discussing several refining and marketing joint ventures in Southeast Asia, such as Indonesia, Nasser said. With about 60 per cent to 70 per cent of its exports going to Asia, it’s very much focused on growth in this area, which includes looking for investments within China’s downstream sector.
The company is also evaluating opportunities in the US as part of its plan to increase its global refining and marketing capacity to between 8 million and 10 million barrels a day.