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Oil Amp Gas
Non-Opec producers blamed for oil slide
From the Financial Times of Sun, 21 Dec 2014 09:23:40 GMT
Saudi Oil Minister Ali al-Naimi (C) speaks with United Arab Emirates Energy Minister Suhail bin Mohamed al-Mazroui (R) during the opening session of the 10th Arab Energy Conference in Abu Dhabi, on December 21, 2014©AFP

Production debate: Ali al-Naimi, Saudi oil minister (c), speaks with Suhail bin Mohammed al-Mazroui, United Arab Emirates energy minister (r), at the Arab Energy Conference in Abu Dhabi

The oil ministers of Saudi Arabia and the United Arab Emirates have blamed the oil price rout on producers outside of Opec and reaffirmed their stance to keep output at current levels.

Ali al-Naimi, Saudi Arabia’s oil minister, said a lack of co-operation from countries outside the cartel was a key contributor to the near 50 per cent slide in crude oil prices since the middle of June.

“The kingdom of Saudi Arabia and other countries sought to bring back balance to the market, but the lack of co-operation from other producers outside Opec and the spread of misleading information and speculation led to the continuation of the drop in prices,” he said at an energy conference in Abu Dhabi on Sunday, according to Reuters. “Let the most efficient producers produce,” he added.

Speaking at the same gathering, Suhail bin Mohammed al-Mazroui, the UAE energy minister, said one of the principal reasons for the price falls was “the irresponsible production of some producers from outside Opec”.

The comments from the two Gulf producers underline their commitment to production targets that stand at 30m barrels day, despite calls from some poorer Opec members to reduce output to bolster prices.

Opec’s production policy and concerns about a supply glut have seen the price of Brent crude — the international oil benchmark — fall below $60 a barrel, hitting its lowest level in more than five years last week.

At the conference, Mr Al-Mazrouei echoed a previous statement, saying “Opec is not a swing producer” and “it’s not fair that we correct the market for everyone else”.

The UAE is thought to have the closest views to Saudi Arabia, a Gulf ally as well as the cartel’s largest producer and de facto leader.

Ahead of last month’s Opec meeting in Vienna, Mr Al-Mazrouei told the Financial Times: “Yes, there is an oversupply but that oversupply is not an Opec problem.”

He also said that non-Opec countries and high-cost production — such as oil from US shale fields — should play a role in balancing the market. He says lower prices would help cut excess supplies from more expensive oilfields while preserving the share of lower-cost Opec producers. The “market will fix it”, he said in November.

At the conference, Mr Naimi said for the second time in a week that he was “confident the oil market will improve”, adding that the price fall would not have “a noticeable and big” impact on Saudi Arabia’s economy.

Mr Naimi has been criticised at home for his failure to communicate properly the thinking behind the decision to maintain production levels. The drop in oil prices has eaten into the country’s savings and roiled its stock markets.

He has sought to rebut broader claims that Saudi Arabia has been using the oil price as a political tool. “The talk about conspiracy by Saudi Arabia for political motives . . . is baseless and shows lack of understanding,” he said. “The [oil] policy of the kingdom is based on a strict economic basis, nothing more, nothing less.”

Meanwhile, Adel Abdul Mahdi, oil minister for Iraq, told reporters on Sunday that he saw no need for an emergency Opec meeting. His comments were in line with those from other Opec ministers in recent days that suggest they are unlikely to alter their stance on production levels.

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