Saudi: Oil Price Stability Is Not Only Our Responsibility
Saudi Arabia, the world’s top oil producer, has made it clear that it will not solely shoulder the responsibility of re-stabilising the oil market. However, it has asserted that it is ready to jointly work with other major oil producing nations to tackle dropping prices.
Oil prices have fallen around 50 per cent from highs of around $115 per barrel reached in June 2014, dragged down by increasing supply – especially US shale oil – and dropping demand. Prices are presently hovering at around $65 per barrel.
In a statement last month, Saudi’s cabinet said: “The cabinet renews in this context the Kingdom’s affirmations that it remains willing to participate in restoring market stability and improving prices in a reasonable and acceptable manner.
“But this can only be with participation from major oil producing and exporting countries and it must be transparent.”
The cabinet also reiterated that Saudi does not use oil for political purposes against any country, and that it is not competing with shale or other oil supplies.
The statement echoed remarks made by Saudi Oil Minister Ali al-Naimi, who has openly stated that producers outside of the Organisation of the Petroleum Exporting Countries (OPEC) must join in efforts to balance the market.
In November last year, OPEC decided to keep production steady despite pressure and expectation that the group would cut output to stabilise falling prices. The move caused prices to drop even lower.
Looking ahead, the Kingdom is confident that the prices will adjust in line with improving demand worldwide.
According to Ibrahim al-Muhanna, an adviser to Saudi oil minister, oil demand is expected to grow annually by up to one million bpd over the next few years, and world consumption is expected to increase to about 105 million bpd in 2025.
“The current decline in oil prices and demand is a temporary, unnatural situation. The expectation is for continued growth in demand for the various types of energy, including oil,” he said.