By July 10, 2016 Read More →

Saudi energy minister says oil market is balancing

oil market

Saudi Energy Minister Khalid al-Falih says the oil market is more balanced and prices are stabilizing. Reuters photo by Faisal Al Nasser.

Saudi Arabia will always strive to stabilize oil market: Minister

ABU DHABI, July 10 (Reuters) – Saudi Arabia’s energy minister said on Sunday the oil market was becoming more balanced and prices were stabilizing.

Khalid al-Falih said Saudi Arabia, the world’s biggest oil exporter, would always strive to stabilize the oil market, a statement by the energy ministry said on Sunday.

“In doing so, the Kingdom secures the flow of oil supplies as it retains a spare production capacity,” the minister, attending a climate meeting in Berlin, was quoted as saying in the statement.

His remarks echo earlier comments made on Monday by the Saudi minister in the Saudi city of Dhahran at a meeting with newly appointed OPEC secretary general, Mohammed Barkindo.

Figures from top Asian crude buyers China, India, Japan and South Korea suggest that Saudi Arabia is effectively conceding market share to rivals such as fellow Gulf producers Iran and Iraq, as well as an increasingly assertive Russia.

While this may not exactly be a voluntary process, it does appear that Saudi Aramco, the kingdom’s state oil company, isn’t pulling out the stops to reverse the loss of market share.

For the past four months Aramco has raised the official selling price (OSP) of its benchmark Arab Light grade to refiners in Asia, which take about two-thirds of the kingdom’s exports.

The OSP for July-loading cargoes was set at a premium of 60 cents a barrel to the regional Oman-Dubai crude benchmark, up from 25 cents in June and a significant reversal of the discount of $1 as recently as March.

It’s likely the case that Aramco is simply adjusting prices to reflect moves in the Oman-Dubai timespreads and also to reflect a stronger premium for global benchmark Brent over Dubai.

But the mere fact that the OSP has returned to what could be considered more normal patterns indicates the Saudis may be stepping back from a market share at all costs policy.

(Reporting By Maha El Dahan. Editing by Jane Merriman)

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