Saudi Arabia’s Naimi Denies Price War, Seeks Steady Oil

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Saudi Arabia remains committed to seeking a stable oil price and speculation of a battle between crude producers “has no basis in reality,” the country’s Oil Minister Ali Al-Naimi said.

“Saudi oil policy has remained constant for the past few decades and it has not changed today,” al-Naimi said at a conference in Acapulco, Mexico, today. “We want stable oil markets and steady prices, because this is good for producers, consumers and investors.”

Al-Naimi hasn’t spoken publicly since Sept. 11, during which time Brent futures slumped 17 percent to a four-year low. Saudi discounts offered to Asian customers in October triggered speculation that the Organization of Petroleum Exporting Countries’ largest member had changed policy and was seeking to preserve market share, instead of supporting prices by curbing supply. OPEC ministers will meet Nov. 27 in Vienna.

“This is very Greenspan-like, an intentional lack of clarity,” Mike Wittner, head of oil market research at Societe Generale SA in New York, said by phone. “In OPEC it’s really only the Saudis that matter but I don’t think we got any clear direction here and I don’t think we will before the meeting. I can go through it point-by-point and find a bullish interpretation and a bearish interpretation.”

Analysts and traders were often unable to come to agreement about the meaning of comments of former Federal Reserve Bank Chairman Alan Greenspan, who resigned in 2006.

Oil plunged into a bear market last month, the result of a surge in shale drilling that has lifted U.S. production to a three-decade high as well as slowing growth in global demand. The drop has caused financial pain for some OPEC members, prompting Ecuador, Venezuela and Libya to call for action to halt the slide.

Price War

“Talk of a price war is a sign of misunderstanding -- deliberate or otherwise -- and has no basis in reality,” al-Naimi said at a natural gas forum. “Saudi Aramco prices oil according to sound marketing procedures -- no more, no less.”

Saudi Arabia’s official selling prices to Asia, which were reduced last month to the lowest in six years and increased this month, “take into account a host of scientific and practical factors, including the state of the market, refinery margins and long-term relationships with customers,” he said. Besides these adjustments, “Saudi Arabia does not set the oil price, the market sets the price.”

“There’s nothing from the headlines to give new insight on what to expect from OPEC,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “Or anything that signals Saudi Arabia is getting ready to cut.”

Brent for December settlement declined 71 cents, or 0.9 percent, to $80.96 a barrel on the London-based ICE Futures Europe exchange at 1:46 p.m. in New York. West Texas Intermediate for December delivery dropped 72 cents, or 0.9 percent, to $77.22 a barrel on the New York Mercantile Exchange.