The decline in oil prices is “temporary,” and crude is steadying at $55 to $60 a barrel amid stronger global demand, an adviser to Saudi Arabia’s oil minister said.
Economic expansion in the U.S. and many developing countries together with growth in populations and middle-class affluence will propel demand for oil for the next 10 years, Ibrahim al-Muhanna said Thursday, according to the text of a speech he gave in Riyadh.
“I’m very optimistic about recovery of oil prices,” al-Muhanna, a senior adviser to the Saudi oil minister, Ali al-Naimi, said without giving a date for any increase. “The world’s current political, economic or petroleum problems are temporary, and their effect on the whole world system is limited.”
Saudi Arabia, the world’s biggest oil exporter, led the Organization of Petroleum Exporting Countries last year in refusing to cut output in a bid to protect market share in the face of growing production from non-OPEC producers. The kingdom boosted oil output in March to 10.3 million barrels a day, the highest in at least 12 years, al-Naimi said on April 5.
Brent crude, a benchmark for half of the global oil trade, has declined 45 percent in the last 12 months. Futures were trading at $56.77 a barrel, up 2.2 percent, Thursday at 2:30 p.m. on the London-based ICE Futures Europe exchange.
Oil consumption increased last year by 700,000 barrels a day, short of expectations that demand would rise by more than 1 million, al-Muhanna said. Speculation about a price war among Saudi Arabia and other producers helped push crude lower, he said. Saudi Arabia sets its crude prices based on refining margins and not politics, al-Muhanna said.