(Bloomberg) – Oil is here to stay as U.S. majors strike blockbuster deals while Saudi policies are helping stabilize global crude markets, the kingdom’s energy minister said at the annual investment forum in Riyadh.
“It’s working,” Energy Minister Prince Abdulaziz bin Salman said of Saudi Arabia’s strategy for managing the oil market. The kingdom has to “ensure that we have a less volatile oil market that will help the global economy to grow and prosper,” he said on the first day of the Future Investment Initiative.
Crude prices rebounded to almost $100 a bbl last month, swelling profits at producers and creating a growing confidence that’s bolstered a flurry of huge deals in the oil patch. Exxon Mobil Corp. agreed to buy shale driller Pioneer Natural Resources Co. and Chevron Corp. is set to acquire storied U.S. producer Hess Corp.
“I don’t think Exxon would merge with Pioneer for charity purposes, or for that matter Chevron would do that with Hess,” Prince Abdulaziz said. “It is a testament by its own virtue that hydrocarbons are here to stay.”
Saudi Arabia hosts the annual FII conference as a showcase for its efforts to develop new jobs and industries alongside technologically advanced and environmentally friendly cities that will guarantee long-term prosperity. The ambitious targets in Saudi Arabia’s Vision 2030 are predicated on preparing for the eventual transition to a post-oil world, all the while bankrolled by shipping barrels around the globe.
Oil will continue to see “significant” demand growth as economies bounce back and major consumers like China return to faster growth, Amin Nasser, Chief Executive Officer of state producer Saudi Aramco, said on a separate panel at the event. Energy consumption is continuing to grow even as economies face headwinds, Nasser said.
Investment in oil is still needed to meet growing demand and avoid a jump in prices, Patrick Pouyanne, CEO of TotalEnergies SE, said on the same panel. It’s wrong to criticize investments in energy supplies, he said.
Andurand says oil must hit $110 before Saudi Arabia eases curbs. Oil trader Pierre Andurand said he expects Saudi Arabia to keep its current supply curbs in place until prices reach at least $110 a barrel.
“The Saudis will have to decide when and at what price to bring supply back,” the founder of Andurand Capital Management LLP said. “For me, an adjustment likely will come around $110 a barrel. So there’s room to the upside for prices.”
As inventories decline in the coming months, “the market will have to beg for more supply at some point,” he said.
World Bank says Mideast unrest is ‘game changer’ if uncontained. The ongoing war between Israel and Hamas could hurt economies in the entire Middle East region, including oil producers, if not contained, according to the World Bank.
“It used to be that everyone talked about the West and China de-coupling,” Ajay Banga said in a Bloomberg Television interview on Tuesday. “Right now, the much bigger issue is the Middle East and what is happening there.”
Saudi Arabia’s oil market strategy is working: Energy minister. Saudi Arabia’s strategy for managing the oil market is working, Energy Minister Prince Abdulaziz bin Salman said. The kingdom has to “ensure that we have a less volatile oil market that will help the global economy to grow and prosper.”
The big takeovers in the U.S. petroleum industry show that oil and gas are here to stay, he said. He was refering to Exxon Mobil Corp.’s purchase of shale driller Pioneer Natural Resources Co. and Chevron Corp.’s deal to acquire storied U.S. producer Hess Corp.
Citigroup’s Fraser says the ‘new S’ in ESG is security. The escalating tensions between Israel and Hamas are prompting global business chiefs to think more about security issues, according to Citigroup’s Fraser.
“There is a new S in ESG which is security, be it food security, energy security, it could be defense, or financial security,” she said. “That’s certainly a theme for all CEOs around the world – how to build more resilient companies and countries.”
