OPEC members say they are willing to wait six months to a year to see if the market corrects itself

Suhail Bin Mohammed al-Mazroui, oil minister of the United Arab Emirates and a close ally of Saudi Arabia’s King Abdullah, said that OPEC has no plans to intervene in the oil market, reports Reuters.

“The market takes time, it’s like a big gigantic ship,” he said on Monday. “If the market takes three months, six months, a year to balance and then that would help all of us because we will all have a more mature stabilized market. Then (so) be it.”

The oil minister’s remarks dims hopes that $60 a barrel might be a red line for OPEC to take action to prevent the further decline of oil prices. With Brent crude prices slipping below $60 for the first time since 2009 this week, it appears that the cartel is content to let prices continue to fall in order to protect its share of the market.

As prices fall, Saudi Arabia plans to keep spending

The Tadawul (SASEIDX) stock index has lost almost one-third of its value since September amid expectations that falling oil prices will curtail government spending, reports Bloomberg. In response to the SASEIDX index hemorrhaging value, Saudi Arabia’s Finance Minister Ibrahim al-Assaf announced that the government plans to fund “massive” development projects next year, leading to a rebound in the index of over 300 points Thursday. The development projects will be focused on health care, education, social services and security.

While Saudi Arabia hasn’t yet published its budget for 2015, King Abdullah’s government announced about $500 billion in projects over the past few years to build roads, airports and industrial centers as he seeks to reduce the country’s dependence on oil revenue and trim its 12% unemployment rate.

Saudi Arabia has maintained a counter-cyclical economic policy by increasing financial reserves and cutting public debt during periods of “high public revenue,” the state-run Saudi Press Agency cited al-Assaf as saying, reports Bloomberg. This policy has provided the kingdom with “lines of defense” in times of need, and appears to be acting as a buffer as Saudi Arabia (and the rest of the world) continues to wait and see how low oil prices will go before the market stabilizes.

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