Saudi Arabia assures on supply as oil hits $80 a barrel

RIYADH/WASHINGTON

Saudi Arabia said on May 18 it is consulting other oil producers in and outside OPEC to ensure the world has adequate supplies to support economic growth after prices hit $80 a barrel for the first time since 2014.

OPEC’s most influential energy minister, Saudi Arabia’s Khalid al-Falih, said in a Twitter post that he had called his counterparts in the United Arab Emirates, the United States and Russia, as well as major oil consumer South Korea, to “coordinate global action to ease global market anxiety.”

Falih also said he had reassured the executive director of the International Energy Agency of “commitment to the stability of oil markets and the global economy” and that he would contact others over the next few days,” as reported by Reuters.

On May 17, Falih called Indian Petroleum Minister Dharmendra Pradhan to assure him that supporting global economic growth was “one of the kingdom’s key goals,” the Saudi government said in a statement, after India expressed frustration with the recent surge in oil prices.

Oil prices held firm on May 18, with Brent crude trading at around $79.70 per barrel after the international benchmark broke through $80 for the first time since November 2014 the previous day.

$100 per barrel?

Meanwhile, the CEO of French oil giant Total said on May 17 he would not be surprised to see the price of a barrel of crude reach $100 later this year.

“We are in a new world. We are in a world where geopolitics are dominating the market again,” Patrick Pouyanne said at an event held by a Washington think tank, as quoted by AFP on May 17.

Market ripples from Venezuela’s economic distress and President Donald Trump’s decision this month to exit a joint sanctions deal on Iran’s nuclear program have pushed prices higher.

Economists warn that rising oil prices pose a danger to the current economic expansion and could dull the effects recently enacted U.S. economic stimulus.

“OPEC and Russia have been implementing their policies efficiently,” Pouyanne said, referring to the Organization of the Petroleum Exporting Countries’ efforts to clamp down on supply.

OPEC and Russia have held to production limits since early last year to boost prices.

“And on top of it, you have the announcement on Iran, which is pushing the price up,” said Pouyanne.

“So I wouldn’t be surprised to see $100 per barrel in the coming months.”