Saudi Arabia's oil minister broke months of silence to speak publicly about the Gulf nation's stance on the oil market and dismiss claims that it had triggered a "price war". Ali al-Naimi had kept quiet on whether Saudi Arabia will cut output to remove surplus oil from the market in response to dramatically lower Brent crude prices, which are hovering below $80 a barrel mark - a four-year low.
Talking to Reuters, he said the country was working "with other producers to ensure price stability for the interest of producers, consumers and the industry at large".
Oil market analysts have been hesitant to comment producer ahead of a gathering of the cartel's members later on this month. The steep drops in the oil price have prompted chatter about whether Opec will cut production targets in order to defend higher oil prices. The price plunge in Brent to below 80 dollars on Wednesday November 12- down more than 30 per cent from its mid-June high - has also spurred numerous theories about Saudi Arabia's motives, which Mr Naimi said were "wild and inaccurate conjecture".
Some industry observers have said Saudi Arabia has allowed the oil price to fall to drive down production from US shale rivals, who need higher prices to keep pumping at the same level. Others have said the Gulf nation was looking to criticise Russia or Iran, whose government coffers are more dependent on higher oil prices to balance budgets. "Talk of a price war is a sign of misunderstanding, deliberate or otherwise, and has no basis in reality," Mr Naimi said at an event in the Mexican Pacific resort of Acapulco. "We do not set the oil price. The market sets the prices."
The kingdom's own export prices, as calculated by its marketing arm Saudi Aramco, have become a focal point for a sensitive oil market analysts looking for signals as to what Saudi Arabia is thinking. Mr Naimi, in response, said that its official selling prices for Asia, the US and Europe were set through a formula that took into account the state of the market and "[nothing] more or less". "Saudi oil policy has been constant for the last few decades and it has not changed today," he added. "We do not seek to politicise oil...for us, it's a question of supply and demand, it's purely business."
Opec's latest monthly report, the last before the cartel meets in Vienna on November 27, forecast that 2015 demand for its oil will drop to 29.2m barrels a day - almost 1m b/d less than it is currently producing. This in theory should facilitate a production cut at the upcoming meeting. "However, between Saudi Arabia reluctant to reduce output unilaterally and Venezuela, Libya, Iran and Iraq cash-strapped (and hence unlikely to be able to reduce output), it is hard to see how such a cut is achieved."
