Oil Price Drop Unexpected, OPEC Was Right Not To Cut – Kuwait

The depth of the oil price drop was unexpected, Kuwait’s oil minister said on Wednesday, repeating too that OPEC had made the right decision in not cutting its output.

The comments by Ali al-Omair reflect how even core Gulf OPEC producers who had led the decision in November, blocking a call for a cut by others, did not predict the scale of the price collapse of about 60 per cent in the last six months.

Omair told the Kuwaiti parliament the “unexpected fall in oil prices affects Kuwait and the other crude-exporting countries,” state news agency KUNA reported.

Brent was trading at around $46 a barrel on Wednesday.

Some non-Gulf OPEC producers have already voiced their growing scepticism on whether the decision was correct or not.

Saudi Oil Minister Ali al-Naimi has said he convinced his fellow OPEC ministers that it is not in the group’s interest to cut oil output however far prices may fall.

“We harbour no ill will towards anyone, and it is not possible for Kuwait to participate in what others see as oil price wars,” the Kuwaiti minister was quoted as saying.

Iranian President Hassan Rouhani said on Tuesday that countries behind the fall in global oil prices would regret their decision and warned that Saudi Arabia and Kuwait would suffer alongside Iran from the price drop.

The firm stance of Saudi Arabia, the UAE and other Gulf Arab producers in the Organization of the Petroleum Exporting Countries – who account for more than half of the group’s production – is causing dismay among some other oil exporters who need higher oil prices to balance their budgets.

Gulf countries have sufficient financial reserves to weather the fall in oil prices.

A diplomatic push by OPEC price hawks Venezuela and Iran for an OPEC oil output cut has failed to soften the refusal of the group’s Gulf members to do so for now, delegates told Reuters this week.

Kuwait echoed UAE’s comments on Tuesday, showing no sign of backing down from OPEC’s insistence to defend its market share and stick to its November decision.

“We see that our (OPEC) decision was right,” Omair said. “If Kuwait reduced it’s production it is possible that our market shares… would go to other producers.”

He said there had not been any requests for an emergency OPEC meeting. The group is set to meet next in June.

Iran and Algeria have both called on OPEC to cut output in the face of the slide in oil prices.