Saudi Arabia will not act to reduce global oil supply even if the price of crude fell as low as $20 a barrel the country’s oil minister said on Monday, prompting a renewed rout in Brent prices.
Having finished last week relatively strongly, the comments by Ali Al-Naimi sent the price of Brent back below $60 yesterday, although it rallied back above the value in early Tuesday trading.
Al-Naimi, the most powerful voice of the oil cartel Opec, said in an interview with the Middle East Economic Survey that the world may never again see $100 oil. Opec had previously defended the price around $100, attributed as the break-even cost to support Saudia Arabia’s social spending.
‘Whether it goes down to $20, $40, $50, $60, it is irrelevant,’ he said. ‘It is not in the interest of Opec producers to cut their production, whatever the price is.’
The actual cost of extraction in Saudi Arabia is only between $4-$5 a barrel. He conceded that the policy would fall harder on states which had not built equivalent dollar reserves or which faced significantly higher extraction costs.‘We want to tell the world that high efficiency producing countries are the ones that deserve market share. If the price falls, it falls… Others will be harmed greatly before we feel any pain.