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Aramco says low oil prices will end next year

Saudi Aramco is one of the world's biggest oil producers [AFP]

Date of publication: 2 November, 2016

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Saudi Arabia's state oil producer has said a global supply glut will end in 2017, leading to higher prices at the pumps.

Oil prices should steady next year, the president of Saudi Aramco said on Tuesday, after over-supply drove prices to worrying lows for Gulf states.

"The gap between supply and demand is closing," Amin Nasser, chief executive of the state-owned oil company told an international energy forum.

He said Aramco's analysis sees the market "balanced by the first half of 2017".

Last week, the chief of the International Energy Agency said the market would rebalance earlier than expected if major crude producers implement a deal to cap output when they meet next month.

Under current conditions, the IEA expects global output to exceed demand until the second half of 2017, Fatih Birol said in Singapore.

But he said that if OPEC and non-OPEC producers intervene in the markets, "this rebalance can be earlier than the second half of 2017".

In a surprise move, members of OPEC led by Saudi Arabia agreed in September on a deal to trim production.

The OPEC deal which aims to stabilise prices is the first to limit production since 2008 but details will only be determined during the group's meeting on 30 November in Vienna.

On Saturday, OPEC officials held talks with Russia and other non-cartel members in Vienna to debate how to implement the plan aimed at cutting oil output.

OPEC members Iraq, Iran, Nigeria and Libya have all sought exclusion from the cartel's exemption plan, Bloomberg News reported.

Production has outpaced demand over the past two years, with the resulting supply glut hammering prices from highs of more than $100 a barrel in June 2014 to near 13-year lows below $30 in February this year. Prices are currently hovering near $50 a barrel.

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