Saudi oil minister Ali Al Naimi says Saudi Arabia is producing near record levels of crude in April, underscoring the kingdom’s willingness to defend market share at a time when oil markets have staged a fragile recovery.
There are worries that growing production from Saudi Arabia and other members of Opec could snuff out a recent rebound in oil prices, particularly with economic growth in key oil consumer China the slowest in six years in the first quarter.
Opec had said its overall output surged to 30.79 million barrels per day in March, up 810,000 bpd from the previous month, with demand higher than expected due to lower prices.
Mr Al Naimi said that oil production in Saudi Arabia, the world’s biggest crude exporter, was “around 10 million” bpd in April.
“I have said many times we will always be happy to supply to our customers with what they want. Now they want 10 million,” Mr Al Naimi said in an interview in the South Korean capital of Seoul, where he is due to attend a board meeting of the state oil firm Saudi Aramco.
Mr Al Naimi earlier this month said that Saudi Arabia produced some 10.3 million bpd of crude in March, eclipsing a previous high of 10.2 million bpd in August 2013, according to records going back to the early 1980s.
Oil prices have risen around 17 per cent this month, pushed up by reports of a possible dip in US output, but Morgan Stanley warned on Monday that Saudi production could be more important than developments in the United States.
“We worry about the market’s fixation on the US … Opec production may be more important as production increased 1 million barrels per day month-on-month in March. Saudi Arabia alone added the equivalent of half of Bakken (the largest US shale oil field) production in a matter of months – far beyond any US slowdown,” the bank said in a note.
Asked about whether he was worried about Chinese oil demand with the country’s economic growth slowing down, Mr Al Naimi said: “We have seen no change in oil demand. We are still supplying the same volume as we have been supplying for some time.”
The minister said Saudi Arabia was supplying about 1 million bpd to China, the world’s biggest net oil importer, and he expected Asia’s demand to grow.
“I believe demand over time will continue to grow. We are very positive in that sense. There is absolutely no concern from our side. We haven’t seen any change since the prices changed,” he said.
Benchmark Brent crude futures have rebounded from a six-year low of US$45.19 a barrel hit in January to trade above $64 on Monday, but are still down around 45 per cent from last year’s peak.
Opec has been fighting to retain customers after losing market share to new producers, such as shale in the United States, and decided not to cut output at the group’s November meeting.
The move led to a slide in prices and calls from some producers, even within Opec, to relax the stance and cut output. But the strategy has shown recent signs of success as US shale output seems to be dipping and oil prices have clawed back some lost ground.
Asked about Saudi Arabia’s position on output at Opec’s next meeting on June 5, Mr Al Naimi said: “That remains to be seen. We have to look at the data, information and then decide what to do.”
Mr Al Naimi said that to stabilise the market all producers should cooperate.
“You know I have said many times stability of the market depends on cooperation among producers, consumers and industries. So, yes we need cooperation of all producers to stabilise the market.”
Follow The National’s Business section on Twitter