Tue Feb 28, 2017 01:55PM
Saudi Arabia's Jazan refinery which started operation in 2016
Saudi Arabia's Jazan refinery which started operation in 2016

Sources close to the Organization of the Petroleum Exporting Countries (OPEC) say Saudi Arabia is interested to see crude oil prices reach around 60 a barrel in 2017.

According to the sources, Saudi Arabia and its allies including the United Arab Emirates, Kuwait and Qatar expect the growth to heat investors’ interest in new fields without leading to an upsurge in US shale output.

Back in November, delegates attending the 171st ministerial meeting of OPEC reached an agreement to cut production by about 1.8 mn barrels per day from January 1 in a bid to prop up global prices. Since then, crude prices have increased by more than 14 percent but are still only trading around $56 a barrel.

Saudi Arabia and its allies are under financial pressure because of low oil prices. On the other hand, they do not want the prices to be so high that they encourage rival US shale producers to increase production again.

"OPEC and particularly the Saudis want higher prices not just for investment but also as Riyadh seeks to offload a stake in state-owned oil giant Saudi Aramco‎," A Persian Gulf oil industry source said.  

Another source said it is difficult, however, to see oil prices rising to $60 or above in 2017 because of a lingering oversupply.

The source went further, adding:” Even if shale oil production rose by more than 300,000 bpd the market could absorb it during the cold winter season when demand peaks.”