Saudi Arabia is looking to address the energy requirements of some European countries after boosting its crude oil exports to the region last month, Saudi Energy Minister Prince Abdulaziz bin Salman said on Tuesday.
Saudi Aramco, the world’s largest oil exporting company, exported 950,000 barrels per day of crude to Europe last month, compared to 490,000 bpd in the same period a year earlier, the minister said at the Future Investment Initiative conference in Riyadh.
The kingdom is “engaged” with countries such as Germany and Poland to see if “any type of facilitations” are required, he said.
“They [European countries] are going through a phase of de-bottlenecking their supply chains and supply systems,” he said.
Europe is experiencing its worst energy crisis after Russia, the region’s biggest natural gas supplier, reduced its exports in response to EU’s wide-ranging economic sanctions. To prepare for the peak winter season, countries are restarting coal plants and boosting liquefied natural gas (LNG) imports from the US and Qatar.
This could be the “worst energy crisis” with the exception of the Covid-19 pandemic and countries should focus on finding a solution, instead of adopting “kicking the can” policies, the prince said.
Brent crude plunged to an 18-year low in 2020 after Covid restrictions erased global fuel demand. West Texas Intermediate, the gauge that tracks US crude, turned negative for the first time.
Brent crude, which surged to $140 a barrel after Russia’s invasion of Ukraine in February, was up 0.6 per cent at $93.80 a barrel as of 7.15 PM UAE time.
The US and the International Energy Agency (IEA) member countries have been releasing crude from their emergency reserves to bring fuel prices under control.
“People are depleting their emergency stocks [and have] used it as a mechanism to manipulate markets while its profound purpose was to mitigate shortages of supply,” the Saudi energy minister said.
“However, it is my firm duty to make it clear to the world that losing emergency stock may become painful in the months to come”
Last week, US President Joe Biden announced the release of 15 million barrels from the country’s Strategic Petroleum Reserve, completing a 180-million-barrel release announced in March.
Energy markets are going to enter a new phase of uncertainty once an EU ban on Russia crude comes into effect on December 5.
Russia will continue exporting crude to some countries through its pipelines, but it would still need to find a new market for more than 1 million bpd of crude by December, UBS said in a research note last week.
“We do have an uncertainty, [which] will come with some gloomier picture of what the next year would be,” the prince said.
The energy minister said countries could mitigate the situation by taking ‘pre-emptive’ measures.
This month, the Opec+ group of oil producing countries slashed its collective output by 2 million bpd on expectations of a global economic slowdown.
The International Monetary Fund has cut its growth forecast for 2023 and warned of a cost-of-living crisis as the global economy continues to be affected by the war in Ukraine, broadening inflation pressures and a slowdown in China.
“Just two days ago, it was reconfirmed that China will continue with its own [zero-Covid] policy, which means that the much talked about potential growth … will be still in waiting,” the prince said.
Crude production in Saudi Arabia increased by 236,000 bpd to 11.05 million bpd in August, while its exports in the month surged to a more than two-year high of 7.6 million bpd, according to latest data from the Joint Organisations Data Initiative.