Saudi Arabia’s new oil minister indicates return to balancing act

Saudi Arabia’s new oil minister Khalid al- Falih, who replace two-decade old veteran Ali al-Naimi speaking to Houston Chronicle during his visit to the United States has indicated that world’s largest oil exporter may once again return to its market balancing act. For the past two years, Saudi Arabia’s stance to keep production large has contributed to worst supply glut in decades.

Saudi Arabia’s rivalry with Iran led to the 14-member oil producers’ cartel OPEC to abandon its production ceiling late last year. In its last meeting in June, OPEC once again failed to reinstate the ceiling but Mr. Falih has worked to shore up supports within the group to make OPEC relevant again.

In his comments, he suggested that worst supply glut is over it is only the excess inventories that will hang over the oil market for a while until that is worked out too. He gave the strongest indication since the glut about Saudi Arabia’s balancing act as swing producer. He said, Saudi Arabia’s oil policy is rooted in responsibility.

Regarding Saudi Arabia’s state-owned oil giant he said at its website, “Due to its strategic importance, will be expected to balance supply and demand once market conditions recover. Saudi Arabia is seeking to maintain that balance while also giving heed to moderate prices for producers and consumers,”

His outlook on Saudi Arabia’s oil policy is vital, especially when it's shared in his visit to the United States as a member of Saudi Arabia’s strongman Mohammad bin-Salman.