December 26-2014
Saudi Arabia said Sunday it would not cut output to prop up oil markets even if non-OPEC nations did so, in one of the toughest signals yet that the Saudis plan to ride out the market’s biggest slump in years.
Referring to countries outside of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Oil Minister Ali an-Naimi told reporters:
“If they want to cut production, they are welcome: We are not going to cut; certainly Saudi Arabia is not going to cut.”
He said he was “100 percent not pleased” with prices but they would improve, although it was uncertain when. That, of course, is the key question. Iranian Oil Minister Bijan Namdar-Zanganeh is fearful low prices may prevail for a couple of years, which would be devastating for Iran, though not Saudi Arabia.
Naimi blamed the fall in prices on speculators and a lack of cooperation from non-OPEC producers. He dismissed talk—common in Iran—of a conspiracy by Saudi Arabia and the United States to hurt Iran by pushing prices down.
The determined tone of his comments was echoed by some other Arab oil ministers at an oil conference in UAE.
UAE Oil Minister Suhail Bin Mohammed al-Mazroui urged all of the world’s producers not to raise their oil output next year, saying this would quickly steady prices. But Maz-roui knows that the US government doesn’t have the power to set production numbers. That is determined by the oil companies.
Platts oil news reported last week that output from the North Dakota Bakken field and the Texas Eagle Ford field—the world’s two main shale oilfields—rose 42,000 barrels a day or 1.5 percent from October to November despite falling prices.
Mazroui said, “I don’t think we need to cut. We gave a chance to others; they were not willing to do so,” referring to contacts with Russia, Brazil and Mexico before OPEC’s meeting in November.
Naimi said: “The best thing for everybody is to let the most efficient producers produce.”
He also said OPEC’s decision would ultimately help the world economy. “Current prices do not encourage investment in any form of energy, but they stimulate global economic growth, leading ultimately to an increase in global demand and a slowdown in the growth of supplies,” he said.