DUBAI (Reuters) - Saudi Arabia’s powerful oil minister said on Thursday that OPEC could not cut output without the support of other big producers and attempts to get them on board had not worked.
Ali al-Naimi said it was impossible for OPEC to cut alone to reverse the oil price slump — which he called temporary — when others were pumping more, saying that could lead to losing market share and with no guarantee of supporting prices.
Officials and executives from non-OPEC Russia and Mexico travelled to Vienna last month ahead of OPEC’s meeting, with some in the group hoping they would cooperate in output cuts.
Naimi has stayed tightlipped, saying only he had no expectations after meeting them in a Vienna hotel, and that he had not initiated it. OPEC decided not to cut at its meeting.
On Thursday, Naimi told Saudi state news agency SPA that OPEC sought last month, as on past occasions, cooperation from other non-OPEC oil producers but “those efforts were not successful.”
Russia has said it would not cut production even if oil prices fell below $60 per barrel - far below some $100 a barrel it needs to balance its budget.
Brent edged up slightly to near $63 a barrel on Thursday - but was still over 40 percent down from this year’s peaks in June.
“OPEC’s quota as well as Saudi Arabia’s in the global oil market has not changed for several years, which is at the level of 30 million barrels per day for OPEC, out of that around 9.6 million bpd is the kingdom’s, while the production of others from outside OPEC is continuously rising,” Naimi told SPA.
“In a situation like this, it is difficult, if not impossible, for the kingdom or for OPEC to take any action that would reduce its market share and increase the shares of others, at a time when it is difficult to control prices,” he said.
“We would lose on both market share and price.”
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, will maintain its output levels even if there was no guarantee prices would not go much lower.
Moscow’s relations with OPEC were soured by its pledge to cut output in tandem with the group in the early 2000s. Russia failed to follow through, and raised exports instead.
Naimi also reiterated his rejection of any linking of the kingdom’s oil policy with political motives.
“There are wrong information and analyses that are circulated from time to time, like linking oil decisions with political motives. These wrong analyses will be exposed for sure, which would help to bring back balance to the market,” he said.
The shift in Saudi policy to leaving the market to stabilise itself has unleashed a flurry of conspiracy theories, ranging from the Saudis seeking to curtail the U.S. oil boom, to Riyadh looking to undermine Iran and Russia due to their support of Saudi’s arch-enemy, Syrian President Bashar al-Assad.
Naimi said the fall in oil prices was temporary.
“I am optimistic about the future. What we are facing now and what the world is facing is a temporary situation and will pass,” he told SPA.
“The global economy, especially the emerging economies will return to sustainable growth, and therefore the demand for oil will also grow,” he said.
He also warned against the “negative role of speculators” in the oil market, causing the sharp price volatility. He said the kingdom had a strong economy and huge financial reserves that make it able to weather the oil price volatility.
Editing by William Hardy