Exclusive: Saudi Arabia wants oil prices to rise to around $60 in 2017 - sources

Tue Feb 28, 2017 9:14am EST
 
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By Rania El Gamal and Alex Lawler

DUBAI/LONDON (Reuters) - Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year, five sources from OPEC countries and the oil industry said.

This is the level the OPEC heavyweight and its Gulf allies - the United Arab Emirates, Kuwait and Qatar - believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said.

The Organization of the Petroleum Exporting Countries, Russia and other producers pledged last year to cut production by about 1.8 million barrels per day (bpd) from Jan. 1. The first cut in eight years is intended to boost prices and get rid of a supply glut.

Crude prices have risen by more than 14 percent since the November pact but are still only trading around $56 a barrel despite record compliance by OPEC and non-OPEC members.

OPEC officials have repeatedly said the group does not target a specific oil price and their focus is on drawing global oil inventories and helping the market to re-balance.

But behind closed doors, Riyadh and its Gulf OPEC allies hope to see a higher level because the low price has pressured their finances and stoked fears of a future supply shortage.

However, they do not want the price to be so high that it encourages rival U.S. shale producers, which were hard hit by the slump in oil prices, to ramp up production again. Advances in technology have made it easier for them to adapt quickly to oil price fluctuations.

"They (the Saudis) want to see oil prices at $60 towards the end of this year. It's good for (oil) investments," said a Gulf oil industry source familiar with the matter.   Continued...

 
Fuel price and last sale of fuel is seen on a fuel pump during early hours in desert near the village of Sila, UAE-Saudi border,  south of Eastern province of Khobar, Saudi Arabia January 29, 2016. Picture taken January 29, 2016. REUTERS/Hamad I Mohammed