Saudi Arabia’s oil minister on Sunday defended OPEC’s decision to keep output steady despite the biggest market slump in years, saying current prices would help global economic growth and petroleum demand, while Arab states would escape major damage.
Ali al-Naimi blamed a price slide to levels half of those six months earlier on speculators and what he called a lack of cooperation by major producers from outside of the Organization of the Petroleum Exporting Countries (OPEC).
His remarks to a conference in Abu Dhabi marked the second time in three days that he has signalled the world’s biggest crude exporter would not alter output levels but rather aims to allow the market to stabilise on its own.
“I am confident the oil market will improve,” he said.
Suhail Bin Mohammed al-Mazroui, oil minister of the United Arab Emirates (UAE), a close Saudi ally, urged all of the world’s producers not to raise their oil output next year, saying this would quickly steady prices. He did not elaborate.
The world is forecast to need less OPEC oil globally in 2015 because of rising supply of U.S. shale oil and other competing sources, with no significant increase in world demand growth.
At a meeting in November, OPEC kept its target output of 30 million barrels per day (bpd) unchanged, leaving the market to balance itself without the group’s intervention.
That stance was seen as a shift from a longstanding policy in which OPEC powerhouse Saudi Arabia has acted as a swing supplier.
Asked about possible cooperation between members of OPEC, which include the world’s lowest-cost producers, and non-member countries, Naimi replied: “The best thing for everybody is to let the most efficient producers produce”.
He also said that OPEC’s decision would ultimately help the world economy. “Current prices do not encourage investment in any form of energy, but they stimulate global economic growth, leading ultimately to an increase in global demand and a slowdown in the growth of supplies,” he said.
Iraq’s oil minister, Adel Abdel Mahdi, said he saw no need for an OPEC emergency meeting but “we have to wait and see” whether the group was right to keep output unchanged.
Naimi denied politics played a role in the Kingdom’s oil policy and said the price fall would not have “a noticeable and big” impact on Saudi Arabia or other Arab economies.
The market slide has triggered conspiracy theories, ranging from the Saudis seeking to curb the U.S. oil boom, to Riyadh looking to undermine Iran and Russia for their support of Syria.
Before the Vienna meeting last month, there were hints that Russia could cut output or exports if OPEC did the same.
But the message from Moscow after the meeting was that the world’s second largest oil exporter after Saudi Arabia would maintain its output. Moscow’s ties with OPEC were soured by its pledge to cut output in tandem with the group in the early 2000s. Russia failed to follow up, and raised exports instead.
In Abu Dhabi, Naimi suggested OPEC could not act effectively to restore balance to the market without joint action with producers outside of the group who he said had shown a lack of cooperation with the group over oil market conditions.