A surfer rides a wave with an oil drilling rig in the background in Huntington Beach, California, USA 29 September 2013. (EPA/MICHAEL NELSON)
Speaking to Asharq Al-Awsat, the experts said the supply surplus in the international oil market had reached 900,000 barrels a day and that “this surplus was being purchased by some of the major countries to add to their reserves, including China and India.”
Energy affairs expert, Ni’mat Abu Al-Souf, told Asharq Al-Awsat that a strategy of building reserves was being implemented by some of the world’s major net oil consumers, regardless of cost.
He said “the strategy to increase the reserves is to confront market fluctuations or the reduction in supply, amid high consumption in these countries.”
Abu Al-Souf added that “China produces around four million barrels of oil daily while it consumes 10 million barrels per day, therefore, it needs to be prepared for any interruption or reduction in supply.”
Meanwhile, Saudi Arabia’s efforts to decrease domestic oil consumption are expected to bear fruit in the near future.
Abu Al-Souf said “Saudi Arabia has started taking effective measures to reduce domestic energy consumption by relying on gas. Current consumption ranges between 2.8 and 3 million barrels per day.”
He predicted that the benefits of the programs to reduce energy consumption in Saudi Arabia will start to show within two years.
Meanwhile, economics expert Faisal Al-Iqab said the increase in the strategic reserve of some countries was aimed at protecting their markets from world market fluctuations or reductions in supply. He said “amid the geopolitical crises in the region, especially in Libya, Iran, and Syria, countries which have high consumption rates try to take precautionary measures by increasing their strategic reserves.”
Meanwhile, Abdelwahab Al-Sa’adoun, Secretary-General of the Gulf Petrochemicals and Chemicals Association (GPCA) said “the economic development in some countries has an important impact on the volume of international demand for oil. This is what is taking place in China, one of the largest world markets in terms of demand for oil, which largely relies on Saudi oil in particular, and Gulf oil in general.”
He added that a drop in the rate of economic growth in China in the final months of 2012 reduced demand. In turn, this prompted Saudi Arabia to reduce its production by around 700,000 barrels per day, to reach the current level of 9 million barrels per day.
Al-Sa’adoun added that Saudi Arabia was still playing a balancing role in the international oil market. He said: “Saudi Arabia has smart policies, through which, balance can be maintained in world markets, and which gives markets and investors confidence in its policies.”
Al-Sa’adoun said despite the increase in domestic production in the United States, American imports still stood at around 8 million barrels per day. He added that Saudi Arabia was able to reach a level of oil production of 12.5 million barrels per day, should the world markets need it.