Aramco chief blames recession signals for oil drop

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The chief executive of Saudi giant Aramco attributed the continued depression in oil prices to fears of recession and economic headwinds, painting a more optimistic picture for demand ahead. [are] economic headwinds, where there are [are] signs of recession everywhere… China continues to recover,” Amin Nasser of Aramco said on Wednesday. He did not specify a timeline for this recovery in demand.

Amin Nasser, CEO of Saudi oil giant Aramco.

Adam Galica | CNBC

The chief executive of Saudi oil giant Aramco on Wednesday attributed the continued depression in oil prices to fears of recession and economic headwinds, painting a more optimistic picture for demand ahead.

“It is in a year where there is [are] economic headwinds, where there are [are] signs of recession everywhere… China continues to recover,” Aramco’s Amin Nasser told an Organization of the Petroleum Exporting Countries conference in Vienna, in response to a question from CNBC about the still-low levels of oil. oil price.

Global crude oil prices have remained tightly bound just above the $75 a barrel threshold despite a series of additional voluntary cuts some OPEC members are implementing through the end of 2024.

On Monday, heavyweights Saudi Arabia and Russia, which lead the OPEC and allies group of countries known as OPEC+, capped the effort with pledges of further cuts. Riyadh intends to extend a voluntary cut of 1 million barrels per day originally declared for July until August, while Moscow has pledged to cut exports by 500,000 barrels per day next month.

Still, Brent futures prices with September expiry were just $76.76 a barrel at 2:28 p.m. London time, up 51 cents a barrel from the previous settlement.

Nasser said the demand situation is expected to improve, pointing to the potential of China, the world’s largest importer of crude oil.

“When things speed up, and [the] the economy is starting to improve, China is starting to pick up, jet fuel is picking up… we are optimistic about the future,” he said, noting that demand for jet fuel supply which is an integral part of the aviation sector remains below levels recorded before the onset of the Covid-19 pandemic.

He did not specify a timetable for this recovery in demand, but the Paris-based energy monitoring agency, the International Energy Agency, reported in May “tighter market balances than we anticipate the second half, when demand is expected to eclipse supply by nearly 2mb/d.”

Market watchers have been particularly on the lookout for improvements in demand from China, whose consumption was constrained by zero-Covid measures before starting to resurface since the start of the year.

“We are making bigger investments. Our forecast is $45 billion to $55 billion for this year, which is growing by leaps and bounds. So that shows our confidence in the future,” Nasser said, referring to spending in capital of Aramco for 2023.

Nasser has historically echoed the position of several OPEC+ officials that dual investment in fossil fuels and decarbonization is necessary to avoid energy supply shortfalls throughout the green transition. This contrasts with the position of the IEA, which in a landmark May 2021 report called for no new oil and gas projects if the world were to reach net zero by 2050.

“There is no single solution to the climate challenge,” OPEC Secretary General Haitham al-Ghais said Wednesday at the start of the OPEC conference. “Of course, as an industry, we want to make sure we have an emissions-free future.”

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