Aramco CEO says oil industry facing ‘a crisis of perception’

Brent edges up to $65 as OPEC seen rebuffing Trump pressure

FE Team | Published: February 27, 2019 00:43:37

Amin Nasser

LONDON, Feb 26 (Reuters): Saudi Aramco's chief executive said on Tuesday the oil industry is facing "a crisis of perception" and the views of some observers that the end of oil is near with the rise of electric vehicles are illogical and not based on fact.
Amin Nasser, CEO of the national oil company of the world's top crude-exporting country, told an industry event in London that demand for oil is expected to increase substantially, driven mainly by the transportation sector.
"Important stakeholders believe that the entire world will soon run on anything, but oil. These views are not based on logic and facts, and are formed mostly in response to pressure and hype," he said in a rare, strongly worded remarks.
"Our industry faces a crisis of perception with multiple stakeholders. Our traditional qualities of ample, reliable and affordable supply are not enough to meet society's expectations today."
He said passenger vehicles made up just 20 per cent of oil demand, while the rest came from other sectors such as planes, ships, trucks and petrochemicals, for which there was no alternative to oil yet to meet expected growth in demand.
He called for more investment in the oil and gas sector to meet future growth and said the oil industry must "push back on exaggerated theories like peak oil demand".
Oil demand is expected by many to peak in coming years as emissions standards around the world tighten and demand grows for more fuel-efficicent vehicles and renewable sources of energy.
Meanwhile, Brent oil edged up to $65 a barrel on Tuesday as Saudi Arabia and the rest of OPEC were expected to stick to their policy of cutting production, despite renewed pressure from US President Donald Trump.
Crude had slid on Monday, when many traders were out of the office attending IP Week, a series of industry events in London, after Trump called on OPEC to ease its efforts to boost the oil market. Prices were "getting too high", he said.
"Yesterday was a typical price action you see during IP Week when you have a headline," said Olivier Jakob, oil analyst at Petromatrix. "But I don't think it will change anything in current OPEC supply policy."
Brent crude, the global benchmark, rose 24 cents to $65.00 by 0939 GMT, after losing 3.5 per cent on Monday. US West Texas Intermediate crude eased 15 cents to $55.33.
Expectations that US crude inventories had risen for a sixth straight week limited the rally.
US crude stocks were seen 3.6 million barrels higher in weekly inventory reports, underlining that supply is adequate in the world's top consumer. The first such report is due at 2130 GMT from the American Petroleum Institute.
Oil is up about 20 per cent since the start of the year, when the Organisation of the Petroleum Exporting Countries and non-member producers, such as Russia, began cutting production in an effort to reduce a global glut.
Saudi Arabia and other OPEC members are likely to be cautious about relaxing their supply-cut plan, Jakob said, after a boost in output in the second half of last year ahead of US sanctions on Iran led to a steep slide in prices.
Oil broker PVM took a similar view.
"Will the kingdom budge and increase production or at least keep it steady," said PVM's Tamas Varga. "Just two weeks after announcing deeper cuts, it would be a capitulation."
US sanctions against OPEC members Iran and Venezuela have also contributed to the gains and are providing a floor for prices, analysts say.