Saudi Arabia and OPEC would find it “difficult, if not impossible” to give up market share by cutting crude production, the country’s oil minister said.
Global oil markets are experiencing “temporary” instability caused mainly by a slowdown in the world economy, Oil Minister Ali Al-Naimi said, according to comments published yesterday by the Saudi Press Agency. He reiterated the country’s intention to maintain output amid plunging prices.
“In a situation like this, it is difficult, if not impossible, that the kingdom or OPEC would carry out any action that may result in a reduction of its share in market and an increase of others’ shares,” Al-Naimi said, according to the state-run news agency. Saudi Arabia, the largest producer in OPEC, will stick to its oil policies, he said.
The Organization of Petroleum Exporting Countries decided Nov. 27 to keep its production target unchanged at 30 million barrels a day, ignoring calls from members including Venezuela to curb output to address a supply glut. Prices, which had fallen 30 percent for the year by the November meeting, plunged after the decision, now extending the drop to 46 percent.
Steady global economic expansion will resume, spurring oil demand, Al-Naimi said, leading him to be “optimistic about the future.”
Brent crude, the international benchmark, added 8 cents to $59.35 a barrel on the London-based ICE Futures Europe exchange at 11:59 a.m. Singapore time.
Increased supply from regions outside OPEC, where oil-production costs are higher, is affecting the market, Al-Naimi said. Saudi Arabia’s crude output has remained stable as production in other regions rose, he said.
OPEC’s decision to maintain output fanned speculation that Saudi Arabia and other members want North American shale drillers and other producers outside the group to be the first to cut production. Saudi Arabia and Iran this month cut the official price levels of their main light crude grades for sale to Asia to the lowest in at least 14 years.
Comments by Al-Naimi and other OPEC ministers this week that the group won’t hold an emergency meeting may indicate that they’re seeking to drive prices down to force other producers out of the market, said Miswin Mahesh, an analyst at Barclays Plc in London.
“It’s all about signaling,” he said by e-mail yesterday. “It almost seems like they are aiming to pull the rug from under non-OPEC suppliers, swiftly rather than slowly. A slow gradual price fall would give room for maneuver and slow the supply adjustment.”
Ministers from the United Arab Emirates and Kuwait this week also said the group wasn’t planning an emergency meeting. Saudi Arabia led a group of Arab Persian Gulf countries in opposing calls by Venezuela and Iran to cut output at the November OPEC gathering.
“How hard will Saudi work to bring prices down really fast?” Jamie Webster, a Washington-based senior director for global oil markets at IHS Inc., said on Twitter. “Answer appears to be ‘very.’”
In November, the 12-member group pumped 30.56 million barrels a day of crude, exceeding its output target for a sixth straight month, according to data compiled by Bloomberg. The group’s own forecasts show that world demand for its crude next year will fall to 28.9 million barrels a day, the lowest since 2003.
Saudi Arabia has large enough financial resources to resist the economic impact of the current oil price fluctuations, Al-Naimi said.
The decline in prices won’t last long, U.A.E. Energy Minister Suhail Al-Mazrouei, said yesterday, according to that country’s state-run news agency. OPEC won’t change its output level and isn’t planning an emergency meeting before the next scheduled gathering on June 5, he said.