Saudi Oil minister says OPEC will not cut, no matter how far prices fall.
Ali al-Naimi, Saudi Arabia’s oil minister, says the kingdom has convinced fellow OPEC members that it is not in the group’s interest to cut oil output, regardless how far prices might fall.
Speaking in an interview with the Middle East Economic Survey (MEES), Naimi said, “As a policy for OPEC, and I convinced OPEC of this, even Mr. al-Babri (the OPEC Secretary General) is now convinced, it is not in the interest of OPEC producers to cut their production, whatever the price is,” reports CNBC.
“Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he said.
Naimi said Saudi Arabia is prepared to increase output and gain market share by meeting the demands of any new customers, adding that lower crude prices would help demand by stimulating the economy. The Kingdom’s oil minister also said we “may not” see oil back at $100 a barrel again.
Many institutions, including the National Australia Bank, expect the average price of WTI and Brent to be in the $60 to $70 range for 2015. In a note released by the bank, it said it expected Brent and WTI to average $68 and $64 respectively next year, according to CNBC. At the time of this article’s writing, WTI was trading at $55.41 and Brent was trading at $60.11.
Both sides pointing fingers
At a conference in Abu Dhabi, Naimi placed the blame for the price slump on speculators and a lack of cooperation from non-OPEC producers, reports The Wall Street Journal. Non-OPEC producers “will realize that it is in their interests to cooperate to ensure high prices for everyone,” said Naimi.
When asked later if OPEC would cut production if non-OPEC producers offered to reduce their own output, Naimi said, “It is too late.”
“One of the main reasons that led to the price fall is the irresponsible production from some of the producers outside the organization [OPEC},” said Suhail Mohamed Faraj al-Mazrouei, the oil minister for the United Arab Emirates.
Qatari Oil Minister Mohammed Bin Saleh al-Sada, meanwhile, said those who cannot stand the pressure of lower prices will have to step down and give way to those who can do better in terms of efficiency.
While various OPEC member oil ministers blame the irresponsibility of producers outside the cartel, some analysts blame the organization for influencing the current depression in prices. Olivier Jakob, an oil analyst at Petromatrix Oil in Zug, Switzerland, is one of those analysts. “[Prices] are going down because you have some OPEC ministers who come every day making statements trying to drive the market down … they basically want oil prices to move lower to reduce production in the U.S.”
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