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Forget $100 oil. $75 is probably the ceiling this year, says Oman’s oil minister

  • Oil prices probably won't rise much beyond recent highs near $75 a barrel, according to Minister Mohammed bin Hamad Al Rumhi of Oman.
  • The forecast comes amid reports that top oil exporter Saudi Arabia would like prices to rise into a range between $80 and $100.
  • On Friday, President Donald Trump tweeted that OPEC is keeping oil prices artificially high.
Omani Energy Minister Mohammed bin Hamad al-Rumhi
Mohammed Mahjoub | AFP | Getty Images
Omani Energy Minister Mohammed bin Hamad al-Rumhi

Oil prices probably won't rise much beyond recent highs near $75 a barrel, according to Minister Mohammed bin Hamad Al Rumhi of Oman.

The forecast from the world's longest-serving oil minister comes amid reports that top oil exporter Saudi Arabia would like international benchmark Brent crude prices to rise into a range between $80 and $100.

Some traders say that is feeding speculation that the Saudis could use their influence over other oil producers to block any changes to a production-cutting deal among two dozen nations —even as the agreement's goal is within sight and oil prices rise to more than three-year highs.

Those reports may have percolated all the way up to the White House. On Friday, President Donald Trump complained on Twitter that OPEC is keeping oil prices artificially high.

But Minister Mohammed bin Hamad Al Rumhi of Oman said it's premature to start talking about oil returning to $100 a barrel.

"I think $65 to $75 is more realistic numbers for the rest of the year, but there are so many factors that can change that," he told CNBC on Thursday.

Rumhi made his comments as several ministers gathered in Jeddah, Saudi Arabia to assess compliance with the output caps.

Saudi Arabian officials have reportedly told industry sources they prefer an oil price above $80 a barrel. That price would support the stock market debut for the kingdom's oil giant Saudi Aramco and other state-funded programs, sources told Reuters and Bloomberg.

However, Rumhi stressed that there is no consensus among the 24 participating nations about the optimal price.

"In my opinion, where we are is not too bad and we can live with it. That's $65 to $75, give or take, for the foreseeable future," he said.

Still, Rumhi said the production-cutting deal has not yet achieved its aim of balancing the market.

Oman is one of several nations that partnered with the 14-member OPEC cartel and Russia at the start of 2017 to remove 1.8 million barrels a day from the market. Their official goal is to drive down stockpiles in developed nations to their five-year average.

Inventories fell to just 30 million barrels above that level in February, according to the International Energy Agency. The IEA said this month that OPEC may have achieved its goal by now.

"I don't think the mission is accomplished," Rumhi said. "It's a work in progress. We have made progress, but I don't think that the job is finished."

Rumhi said he is focused on the balance between supply and demand, and he does not believe the oil market has swung into undersupply. In his view, it is balanced or near balanced at best, and may still be oversupplied.

Saudi Energy Minister Khalid al-Falih also stressed on Friday that it's too soon to declare mission accomplished. Asked about Trump's tweet, Falih said the market should determine the price of oil.

OPEC meets in June to discuss potential adjustments to the agreement.