Saudi Oil Minister Ali al-Naimi’s first comments in months on the oil market left other OPEC delegates scratching their heads over whether he will support calls for an output cut when the producer group meets in two weeks, with crude prices sinking.
Naimi, sometimes dubbed the “Alan Greenspan of oil” in a reference to the former Federal Reserve chairman’s huge influence and occasional cryptic remarks, on Wednesday said the Saudi policy of seeking stable global markets had not changed.
But he offered no insight on his response to sliding oil prices, and opinion is divided inside and outside the Organization of the Petroleum Exporting Countries on whether the group will act.
Oil has fallen to a four-year low below $79 a barrel on speculation Saudi Arabia is more concerned with maintaining market share than supporting prices, and on scepticism OPEC will cut supply when it meets on Nov. 27.
One OPEC source saw Naimi’s comments as an indication that Saudi Arabia agreed with the stance of fellow core Gulf OPEC member Kuwait, and others such as Iran, that a cut is unlikely.
“The message from the Saudi oil minister is mainly to get support to not support a cut,” the source said. “There is no price war and the market is fine.”
OPEC delegates and traders are not the only ones trying to decode Naimi’s comments. Since he spoke, Saudi TV channel Al Arabiya has been broadcasting interviews with Gulf Arab analysts saying there will be no cut.
But an OPEC delegate saw Naimi’s comments as an indication that Saudi Arabia and the rest of OPEC will do what is needed to balance the market — crucially, however, avoiding all mention of how.
The speech was “positive with some vagueness”, the delegate, who did not wish to be identified, said.
Another OPEC source said the Saudi minister had deftly avoided any hints on strategy and that there would be little clarity until Naimi arrived for the OPEC meeting.
“I don’t think there was anything new,” the source said. “He did not give any inkling of what he’ll do in Vienna.”
Oil prices fell further on Thursday and analysts at Commerzbank said more declines were likely.
“For as long as the most influential OPEC producer continues to give the impression that it will watch the price collapse without taking any action, the price slide will continue,” Commerzbank’s Carsten Fritsch said