Aramco’s chief says that recessionary signals are to blame for the low oil prices, and is ‘optimistic about future demand’

The Saudi Arabian oil giant Aramco’s chief executive on Wednesday blamed the continued decline of oil prices on recessionary fears and economic headwinds. He painted a more positive picture for future demand.

Amin Nasser, Aramco, said in response to a CNBC query on the low oil prices, “This is a year with economic headwinds and recessionary signs all over the place. China’s still improving.”

The global crude oil price has remained tightly rage-bound, just above $75 per barrel despite a series of voluntary cuts implemented by some OPEC member states until the end 2024.

Saudi Arabia and Russia, who are the leaders of OPEC+, a group that includes OPEC and its allies — hailed this effort on Monday by pledging to further reduce production. Riyadh intends to extend a 1-million-barrel-per-day voluntary cut initially declared for July into August, while Moscow has committed to lower its exports by 500,000 barrels per day next month.

Brent futures expiring in September were only $76.76 a barrel at 2:28 pm London time. This was a 51-cent increase from the previous settlement.

Nasser said that China’s potential as the world’s biggest crude oil importer will likely improve the demand picture.

He said that if the economy improves, China picks up and the demand for jet fuel increases, he is optimistic about the future.

The International Energy Agency, based in Paris, did not give a timetable for the demand recovery. However, in May, the agency noted that “we anticipate tighter market balances in the second half, when we expect demand to exceed supply by nearly 2 mb/d.”

Market watchers are particularly interested in the improvement of China’s demand, which was initially limited by zero-Covid policies before resuming its growth since the beginning of the year.

We are investing more. This year we are aiming for $45-$55 billion, which is a huge increase. “That shows our confidence for the future,” Nasser stated, referring to Aramco’s planned capital expenditures in 2023.

Nasser, in the past, has echoed several OPEC+ officials who have said that a dual investment into fossil fuels as well as decarbonization are necessary to prevent energy shortages during the green transition. This is in stark contrast to the IEA’s position, which called in a landmark May 2021 report for no new oil or gas projects if we are to achieve net zero energy by 2050.

OPEC Secretary-General Haitham al-Ghais stated on Wednesday, at the beginning of the OPEC Conference: “There are no single-size-fits-all solutions to the climate problem.” As an industry, we are committed to a future free of emissions.