Oil-Related Developments - April 2017

The fall in oil prices that began on March 7 in response to news of high US inventories has not recovered as US inventories continued on their upward trajectory. Brent prices hovered around $ 51, higher than the low of $ 47 they had reached in mid-March; WTI remained around $ 47.

To boost market confidence, Saudi energy minister, Khalid al Falih, said on 17 March that OPEC and its associates could extend their agreement to cut production beyond 30 June if the global inventory situation continued to be excessive. Again, though there are reports that some OPEC and non-OPEC members have not been fully complying with their production cut commitments, al Falih said he believed “in the sincerity of their effort”. He also said he had warned US shale oil producers that, if they with their excessive production of 3-4 years ago, the global market would not absorb it. OPEC will take a view on continuing production cuts at its meeting in Vienna on 25 May.

The Dammam-based Arabian Petroleum Investment Company (Apicorp), that is owned by the ten Arab oil producers, has said that even with the existing cuts oil prices will not go above $ 60 this year on account of the high inventories built up by consumers and the increasing shale oil production.

 

April 3, 2017

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About the Author

Ambassador Talmiz Ahmed

Former Ambassador of India to Saudia Arabia, Oman and UAE, monitors developments in the West Asian region.  

Ambassador Talmiz Ahmad joined the Indian Foreign Service in 1974. Early in his career, he was posted in a number of West Asian countries such as Kuwait, Iraq and Yemen and later, between 1987 and 1990, he was Consul General in Jeddah. He also held positions in the Indian missions in New York, London and Pretoria. He served as Indian Ambassador to Saudi Arabia (2000-03; 2010-11); Oman (2003-04), and the UAE (2007-10). He was also Additional Secretary for International Cooperation in the Ministry of Petroleum and Natural Gas in 2004-06. In July 2011, the Saudi Government conferred on him the King Abdul Aziz Medal First Class for his contribution to the promotion of Indo – Saudi relations. After retirement from the Foreign Service in 2011, he worked in the corporate sector in Dubai for three years. He is now a full-time academic and holds the Ram Sathe Chair for International Studies, Symbiosis International University. He has published three books: Reform in the Arab World: External Influences and Regional Debates (2005), Children of Abraham at War: the Clash of Messianic Militarisms (2010), and The Islamist Challenge in West Asia: Doctrinal and Political Competitions after the Arab Spring (2013). He writes and lectures frequently on Political Islam, the politics and economics of West Asia and the Indian Ocean and energy security issues.