Saudi Aramco says the world is totally misreading the oil market and too focused on 'short-term economics'




Saudi Aramco chief executive Amin Nasser
Saudi Aramco chief executive Amin Nasser  
  • Saudi Aramco CEO Amin Nasser said Tuesday that the world is misreading the oil market.

  • Current crude prices indicate that the market is focused "on short-term economics rather than supply fundamentals," he said.

  • Nasser also reiterated warnings that a pick-up in economic activity would erase spare oil production capacity.

The world is misinterpreted the oil market by worrying too much about a potential recession in the near future, according to Saudi Aramco CEO Amin Nasser.

Current oil prices indicate a focus on "short-term economics rather than supply fundamentals," he told the Energy Intelligence Forum in London on Tuesday.

Brent crude has fallen from highs of $139 a barrel earlier this year to around $90 now, but has rallied in recent days in anticipation of a production cut from OPEC+.

Global supplies could receive another jolt when the European Union bans seaborne Russian oil imports in December, leaving other oil producers with little spare capacity to pick up the slack.

Fearing Russian output will drop sharply after the next round of sanctions, Saudi Arabia wants to maintain additional capacity in reserve, sources told the Financial Times.

For now, spare capacity is very low and could be wiped out once China eases its zero-COVID policies, Nasser told the forum Tuesday, echoing a similar warning he made in September.

"If China opens up, [the] economy starts improving or the aviation industry starts asking for more jet fuel, you will erode this spare capacity," he said. "And when you erode that spare capacity the world should be worried. There will be no space for any hiccup - any interruption, any unforeseen events anywhere around the world."

Saudi Aramco, the world's largest oil company, is one of the only producers continuing to invest in increasing capacity, but Nasser cautioned that continued investment won't spur an immediate boost in output as the process could take years.

 

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