Mohammed bin Hamad Al Rumhy.
Omani oil minister Mohammad bin Hamad al-Rumhy sharply criticised OPEC’s production policy on Wednesday, saying it was creating volatility in the market without benefiting oil producers and that his country was suffering.
His comments, delivered at an energy industry conference in Kuwait that was also attended by the oil ministers of OPEC members Kuwait and Iraq, were Oman’s first direct, public criticism of the group since oil prices plunged last year.
Oman is a small non-OPEC oil exporter which lacks the huge financial reserves that its Gulf neighbours can use to ride out low energy prices. Rumhy’s comments indicated growing concern about the economic damage which Oman could face from cheap oil.
Iran and Venezuela have already complained bitterly about OPEC policy but Oman, a diplomatic ally of key OPEC states such as Saudi Arabia, had previously held back.
In November, OPEC decided to keep its output unchanged despite sliding prices. Saudi Arabia and its Gulf OPEC allies led the decision, saying the group needed to protect its market share against higher-cost suppliers outside OPEC, such as U.S. shale oil producers.
“I fail to understand how market share can be more important than revenue,” Rumhy told the conference.
He said OPEC was enjoying daily revenues of $2.7-2.8 billion when it “declared war” and said it was going to fight for market share. Now daily revenue is roughly $1.5 billion, “and apparently 1.5 is better than 2.7 or 2.8”, he said.
“This is politics that I don’t understand – this is your politics that I don’t understand. We are failing to understand. Business? This is not business.”
Rumhy warned that OPEC’s policy might temporarily force high-cost producers out of the market but they would eventually come back, making OPEC’s policy useless.
“So what we have achieved? We have created volatility, we have achieved volatility … How can you plan your business with a volatile commodity.”
Iraq’s oil minister, Adel Abdel Mehdi, asked by reporters about Rumhy’s criticism, said only: “This is his right, to express whatever he thinks is correct.” Kuwait’s minister did not show any reaction to Rumhy.
Because of the oil price slide, Oman earlier this month announced a 2015 state budget that swung deep into deficit; it projected a shortfall of OMR2.5 billion ($6.5 billion).
“The current situation is bad for us in Oman. This is a really difficult time. This is bad politics,” Rumhy said.