Saudi Arabia sees signs of “thriving” demand in the oil market after the collapse triggered by the pandemic, the kingdom’s oil minister said on Monday. Prince Abdulaziz bin Salman said Saudi Aramco, the state oil company, was now able to increase its export prices for July across every region, and most notably in Asia, which has seen a big rebound in demand as China lifts measures to limit the spread of coronavirus.
The pricing decision, announced on Sunday, was a sign that “demand is coming back and thriving,” the minister said, after the virus hit global consumption of oil by as much as 30 percent.
The kingdom is keen to keep oil’s nascent recovery from April’s 18-year lows intact, with producer economies seeing their government revenues take a massive hit in recent months. The son of Saudi Arabia’s king was speaking days after Opec and Russia agreed to extend their production cuts of nearly 10m barrels day until the end of July.
The one-month extension builds on a deal struck in April for 9.7m barrels a day of cuts, which ended a sector price war that coincided with a dive in oil demand as governments imposed lockdowns. marker, fell 1.6 percent to $38.91.
Even as the so-called Opec+ group decided to prolong the biggest ever deal to curb supplies, Prince Abdulaziz on Monday confirmed a Financial Times report that Saudi Arabia would abandon the extra cuts it pledged last month. The confirmation nudged oil prices lower on Monday, with global benchmark Brent crude down 1.5 percent to about $41.66 a barrel. West Texas Intermediate, the US
The kingdom will unwind the additional production cuts of 1m b/d, as it is increasingly confident in the outlook for the oil market. Prince Abdulaziz said the additional cut had served its purpose.