Saudi Oil Minister Reiterates No-Cut-In-Output Policy

Strongest Words Yet; Guaranteeing Price Is Not Going Up Anytime Soon

Saudi Oil Minister Ali al-Naimi told reporters on Sunday that Saudi Arabia will not cut its oil production to stabilize prices.

“If (non-OPEC producers) want to cut production, they are welcome. We are not going to cut, certainly Saudi Arabia is not going to cut,” said Naimi. He added that his country was “100 percent” not pleased with current prices, but they would improve, although unclear when. (Reuters/zerohedge, 21 December)

Naimi’s remarks, made on the sideline of a conference in Abu Dhabi, and echoed by UAE and Kuwait’s oil ministers, were the strongest signal yet that the kingdom will not cut the output to prop up oil prices, even if non-OPEC countries do, and will instead attempt to ride the market’s biggest slump in years. Those strong words would almost certainly guarantee that the price of crude is not going up anytime soon.  

The crude supply is set to rise even further, with the U.S. output poised to hit a 42-year (if not historical) high in 2015. (zerohedge, 21 December)

At the same time global demand for oil will tumble due to slowing down in the growth of the Chinese economy, and with Japan and Europe facing a recession.

“The world is forecast to need less OPEC oil in 2015 because of a rising supply of U.S. shale oil and other competing sources, with no significant increase in world demand growth,” Reuters, quoting experts, reported today.

Photo credit: Saudi Oil Minister Ali al-Naimi (Reuters)