Oil use seen rising by Saudi Arabian oil minister al-Naimi amid ‘calm’
Oil demand is growing and the market has turned “calm”, according to Saudi Arabia’s oil minister.
“We want to see calm markets,” Ali al-Naimi told reporters after a speech at a conference in the Red Sea city of Jazan in southwestern Saudi Arabia on Wednesday. The nation will remain the largest oil exporter, he said, without specifying dates.
Brent crude futures, a benchmark for more than half of the world’s oil, have gained 7.2 percent this year after plunging 48 percent in 2014. The contract rose as much as $3.54 to $62.20 a barrel Wednesday and was at $61.43 at 1:59 pm in Singapore on the ICE Futures Europe exchange.
Kuwait’s oil minister said this month the surplus in global crude supply is less than the 1.8 million barrels a day the country estimated last month, and that prices will continue to recoup losses. Global oil demand rose 2.2 million barrels a day in December from a year earlier, the strongest growth in 18 months, Londonbased Energy Aspects said on Tuesday.
The Organization of Petroleum Exporting Countries, led by Saudi Arabia, decided on Nov 27 to keep its production target unchanged, leaving more expensive operators to reduce output. The number of oil rigs in the US dropped 35 percent since Dec 5 to the fewest since 2011 , according to Baker Hughes Inc. Outlays for exploration and production will drop by more than $116 billion in 2015, Cowen & Co, a New York-based investment bank, estimates.
Saudi Arabia intends to be the biggest exporter of refined oil products, after the US, al-Naimi said, without giving any dates. The US exported 2.66 million barrels a day of refined products in 2013, according to the US Energy Information Administration. Saudi Arabian Oil Co, the kingdom’s oil-producing and refining company, shipped 331,500 barrels a day out of a capacity of 2.6 million barrels a day, according to the company’s annual review.
The largest Arab economy is spending billions of dollars to diversify its economy, including expanding refineries and chemical plants. Saudi Arabian Oil, known as Saudi Aramco, and Dow Chemical Co expect to start production at a $20 billion chemicals venture this year. The nation is seeking to reduce oil’s share of gross domestic product, al-Naimi said, without providing details.
Saudi Arabia is investing 70 billion riyals ($18.7 billion) in Jazan for a refinery, port and 4,000-megawatt power plant, Aramco Chief Executive Officer Khalid A Al-Falih said at the same conference on Wednesday. The refinery is expected to be completed by about 2017, Suleman al-Bargan, manager of Jazan refinery, said at the conference.