As international oil prices gradually inch up from their steepest decline in more than a year, a top official of Oman’s Ministry of Oil & Gas has affirmed that the slump, while not entirely unexpected, underscores the need for the Sultanate’s oil industry to stay the course in its quest to be cost-competitive in a constrained oil price environment.
Oman crude, like other benchmark crudes, lost more than 10 per cent of their value since the downward spiral in prices that began at the start of February. Blamed primarily on a torrent of shale oil coming onto the US market, the decline has since been reversed with prices bouncing back incrementally.
The DME Oman Crude benchmark traded at $64.49 per barrel yesterday, up from a low of $59.77 per barrel a fortnight ago.
But the slump has not come as a major surprise, according to Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil & Gas. “We all know that oil prices fluctuate. They did rise into the high 60s, with Brent in fact crossing into the 70s this year. But we also know the fundamentals haven’t changed so much, so we hope prices will (climb) back.”
Speaking to journalists on the sidelines of an In-Country Value (ICV) event held at the Ministry premises yesterday, Al Aufi said non-OPEC member Oman was keeping a close tab on the international oil price trend.
“We are monitoring the market very closely,” the Under-Secretary noted. “It’s not that we will make a lot of changes as a result, but our strategy is still holding. OPEC and other supporting oil producers are committed to the production cuts they announced in late 2016. This is still continuing. This commitment was also echoed during the (JMMC) event that took place in Oman earlier this year. So far there is no change to that.”
Offering his take on the outlook for oil prices, the Under-Secretary said: “I think prices will further stabilise. This is the sort of level we expect it stay at. The latest indicators do show that the price will be fluctuating between $58 and $62-63. This is really as per expectation. While the increase in prices was welcome, we knew it would come down (at some point).”
Importantly, the slump further demonstrates the need for Oman’s oil and gas industry, buffeted as it were by three years of fiscal challenges, to persist with its current strategy to be cost-competitive, the official stressed.
“The message to the industry is to stay the course and continue to monitoring their operations, eliminate waste, and collaborate with the service sector to make sure that collaboration results in maintaining high quality and high safety, but at a lower price,” Al Aufi added.