Saudi Arabia Won’t Cut Oil Output

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By: Ivan Baric

With global recession being far from over in most countries, oil prices started to plunge, which caused even more trouble in the global economy. Not only will Russia find itself in big trouble if prices continue to drop (or at least maintain their current level), but it is also likely that all the countries that export oil will need to take certain measures in order to protect their economies.

However, Saudi oil minister, Ali al-Naimi, stated today that the he is certain oil prices will rise, and that the Saudi Arabia won’t be making cuts in oil output. Saudi Arabia is world’s largest oil producer, and al-Naimi thinks that the market would stabilize on its own, regardless of actions undertaken by countries outside of OPEC.

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 at an energy forum in Abu Dhabi.

Saudi Arabia’s oil reserve is bigger than that of any other oil producing country, which makes it easier for them to overcome the current situation, while other countries, such as Venezuela, Iraq, Iran and Russia, need higher prices in order to meet budget goals. Nevertheless, Saudi Arabia and OPEC decided against lowering production so the prices could rise. Al-Naim said: “The best thing for everybody is to let the most efficient produce“.

He continued by blaming the “lack of cooperation from non OPEC producers, lack of information, along with misinformation, and sinister motives of speculators” for the five-year oil price low.

At the end, the minister rejected the idea that the oil-price is a Saudi conspiracy in order to harm other countries, as Iranian President Hassan Rouhani had suggested earlier this month. “I want to say from this podium that talk about a Saudi conspiracy has no basis of accuracy at all and points to a misunderstanding,” Al-Naimi said.

 

Photo courtesy of AFP Photo.

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