Ali al-Naimi says that OPEC’s actions are “the correct path forward”

During a speech at the German-Arab Friendship Association in Berlin, Saudi Arabian oil minister Ali al-Naimi said OPEC’s decision to maintain oil production last year is “the correct path forward.” Many have claimed that Saudi Arabia is waging a price war on U.S. shale production, but the Saudi oil minister dismissed this idea, even calling shale production a “welcome development,” reports The Wall Street Journal.

“New oil supply growth – much of it from the U.S. – is a welcome development for world oil markets,” said Naimi, but “it is not the role of Saudi Arabia, or certain other OPEC nations to subsidize higher cost producers by ceding market share.

I hope and expect supply and demand to once again start to balance, and for prices to stabilize.”

Lower prices are stimulating demand among emerging nations, helping to restore equilibrium in the global market, he said.

Naimi defended OPEC’s decision to maintain production, saying “It makes absolutely no sense for the most efficient producers to be the ones to cut production when we are only 30% of the producers.” The Saudi oil minister went on to call for on other major producers to help cut production, reports CNBC. “In cooperation with many countries we have moderated production levels to improve the market situation. But now the situation is different. We need every major producer to cooperate,” he said.

For its own part, Saudi Arabia has pledged to continue producing as much oil as its customers need, saying that it sees no reason to cut production so long as customers keep buying. “Saudi Arabia will not reduce production unless customers tell us we don’t want your crude, and that is not going to happen because Saudi Arabia is the most reliable supplier worldwide,” said Naimi. “Demand is gradually rising, global economic growth seems more robust and the oil price is stabilizing.”

After losing more than half of its value and falling to less than $48 per barrel in seven months, the price of Brent crude has been holding relatively stable around $60 for about three weeks. Brent is up again today at $60.68 at the time of this articles writing. WTI was down slightly at $51.43.

Other evidence of prices stabilizing came out this week as Saudi Aramco raised prices to customers in Asia by $1.40 after lowering them earlier this year. The price increase was the largest made to Asian buyers in three years, but is still the biggest discount for the time of year since at least 2000, reports Bloomberg.

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