Saudis Signal Interest in Higher Crude Prices

Saudis Signal Interest in Higher Crude PricesSaudis Signal Interest in Higher Crude Prices

OPEC delegates say comments from top exporter Saudi Arabia, which two years ago led the group to drop its historic role of supporting oil prices, are a change in tone and a sign the kingdom is looking, verbally for now, to prop up the market.

Khalid al-Falih, who took over this year from long-serving Saudi oil minister Ali al-Naimi, told German newspaper Handelsblatt that an oil price higher than $50 is needed to achieve a balance in oil markets in the long term, Reuters reported.

There is certainly no sign yet of an actual policy shift by Saudi Arabia, or of the kingdom cutting supplies to support prices. Indeed, Riyadh told OPEC it raised its output in June to within a whisker of a record high reached a year ago.

But OPEC insiders say Falih's comments, and a remark he made last month raising the possibility Saudi Arabia may return to its role of balancing oil supply and demand, contrasted with previous statements from Saudi oil officials.

"This is a change in the Saudi position," an OPEC delegate from a major Middle East producer said of Falih's remarks. "Before, they did not mention a range of prices they were looking for."

"They are looking for a higher price, but they want a moderate price."

OPEC oil revenues collapsed since its November 2014 policy shift accelerated a drop in prices, which hit a 12-year low near $27 a barrel in January and are trading close to $48 - half the level of two years ago.

Another delegate, from an OPEC country which wants the exporter group to work more actively toward supporting prices, was encouraged by the Saudi minister's remarks.

"For sure, a decent price of oil is needed to have enough investment to avoid a supply crunch and a boom in prices a few years from now," this delegate said. "So let us hope for the best. It is good that the Saudis are realizing, but after a huge loss for oil exporters."