Saudi Firm Predicts Oil Price to Hit $70 by Summer

Saudi Firm Predicts Oil Price to Hit $70 by Summer

Saudi Firm Predicts Oil Price to Hit $70 by Summer

Saudi Arabia is expected to announce a slight rise in its crude oil and gas reserves on Wednesday after being independently audited, according to a source familiar with the matter.

The audit is expected to help pave the way for the sale of a 5 per cent stake in Aramco, the world's biggest oil producing company that is seeking local and global listings by 2021. The Saudi minister is also likely to sign an MoU on the minerals development in Baluchistan.

It answers a key question for potential investors in the planned share sale of Saudi Aramco, the state-owned company that manages the Kingdom's vast oil wealth.

Saudi Arabian Energy Minister Khalid Al-Falih revealed the plan on Wednesday in Riyadh, adding the company wanted flexibility in funding the Sabic deal, which could cost about US$70 billion.

Al-Falih told reporters in Riyadh the bond is "probably going to be in US dollars", and having bonds and commercial paper as one of its sources of capital is "prudent and necessary".

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He said that Aramco would also issue bonds in the second-quarter of the year and that company financial details would be published as part of that process.

They have partially rebounded in the past few days after a new deal came into effect, under which OPEC and non-OPEC oil producers agreed to trim output by 1.2 million bpd.

Fiona Cincotta, at City Index, said: "Though traders are explaining [the rise] away with the fact that Saudi Arabia and Russian Federation have agreed to reduce production this quarter, an element of the rise has to do with new position taking at the start of the year and bargain hunting after the oil price flirted with the $50 level in late December".

"The current production still experiences natural declines".

Oil prices fell by 1 per cent yesterday on growing USA supply, although the mood in global markets was increasingly confident amid hopes the United States and China may soon end trade disputes that have undermined global economic growth.

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