Saudi Arabia’s oil chief said in comments published Thursday that there are no links between the kingdom’s decision to oppose production cuts and political objectives - an apparent response to the statement made by Iran’s oil minister last week.
Petroleum Minister Ali Al-Naimi was quoted by AP as saying that there are “incorrect information and analyses ... linking petroleum decisions with political objectives.”
This is while Iran’s Oil Minister Bijan Zanganeh said last week: “The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes.” President Hassan Rouhani also said that the sharp fall in global oil prices was the result of “treachery.”
“These erroneous analyses will undoubtedly be exposed and proven wrong,” Al-Naimi said, adding that eventually “others will see that what we are doing will yield the best results for the kingdom.”
Al-Naimi said he was optimistic about the future, but that for now the kingdom would maintain its current output for competitive reasons. “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, at a market time in which it is difficult to control prices,” he said. “Thus, we lose the market and lose the prices together.”
Pumping Despite Plunging Prices
Saudi Arabia and OPEC would find it “difficult, if not impossible” to give up market share by cutting crude production, Al-Naimi said. He reiterated the country’s intention to maintain output amid plunging prices.
Steady global economic expansion will resume, spurring oil demand, Al-Naimi said, leading him to be “optimistic about the future.”
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.
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.
