Despite tumbling oil prices, Saudi Arabia’s oil minister has insisted the country will not slash production in order to keep prices up.
Brent crude oil – whose per barrel price is used as a world bench mark – dropped by another 2.17 per cent yesterday to $60.05, City AM reports.
The commodity, which is essential for heating, fuel and even plastic bags and cosmetics has fallen 25 per cent in value over the past month – leaving motorists happy and contributing significantly to the low inflation rate in the UK.
In recent days, however, the tumbling prices has been linked to the devaluation of the Russian rouble.
Ali Al-Naimi said “whether it goes down to $20, $40, $50 or $60 it is irrelevant.” The price is half the world value it was securing in June of this year.
The leading player in the Organisation of Petroleum Exporting Countries says he believes that other countries will also be following this policy.
“As a policy for Opec, and I convinced Opec of this, even Mr al-Badri (Opec General Secretary) is not convinced, it is not in the interest of Opec producers to cut their production, whatever the price is.”
Speaking of countries outside the organisation, which caused severe shortages in the 1970s by restricting supply and consequently pushing up the price, he said: “If they want to cut production they are welcome. We are not going to cut, and certainly Saudi Arabia isn’t going to cut.”
Back in November, a key meeting resulted in a decision to maintain output at 30 million barrels a day.
Some analysts have said that Opec is not cutting production in order to maintain its market share – sales, rather than profit maximising.
“It seems like an all-out strategy on their part to finish all the weak players in the market who can’t survive at sub-$60 or even sub-$50 oil,” said John Kilduff, a partner at New York energy hedge fund Again Capital.
Such a move would put the Saudis in an even stronger position with power in the future to control oil prices and impact economies across the globe.