Saudi Arabia said on Monday it was “not unthinkable” that crude oil price could surge to $60 a barrel by the end of the year but warned against drastic production cuts that might shock markets.
Speaking in the opening keynote speech at the World Energy Congress in Istanbul, Saudi Energy Minister Khalid Al-Falih said that whatever the oil price the kingdom was in good shape to implement its reform vision to transform the structure of its crude-based economy by 2030.
For months pressured by concerns of slack demand amid a global economic slowdown at a time of a glut in supply, US oil rose above $50 a barrel in New York last week for the first time since June.
This came after Saudi last month agreed to a surprise output cut of oil cartel OPEC, the first in eight years.
“We are seeing the convergence of supply and demand,” said al-Falih. “It is not unthinkable we could see $60 (a barrel) by the year end.
“But my eyes are not on the price but on supply and demand.”
He added: “OPEC should make sure not to crimp too tightly and create a shock to the market.
“We do not want to shock the markets into a process that could be harmful.”
How low crude oil price affected Saudi
The minister admitted that the kingdom had become “a little fat around the belly, a bit complacent” during the era of high oil prices but was now fully committed to its economic reform programme set out by Deputy Crown Prince Mohammad bin Salman.
“The kingdom will deal with whatever price emerges,” he said.
The minister said he believed that demand for oil would peak but “if it does happen we will be ready for it”.
“The (2030) vision will lead to a stronger and more robust Saudi Arabia,” he said, noting this includes the planned IPO of a portion of state oil giant Saudi Aramco, the biggest such offering in history.
World Energy Congress in Istanbul brings together players across the energy sector to discuss a transformation of the sector.
Turkish President Recep Tayyip Erdogan and also his Russian and Venezuelan counterparts Vladimir Putin and Nicolas Maduro will address the congress later today.