VIENNA – Top OPEC producer Saudi Arabia suggested Wednesday there is no need for the cartel to cut its output ceiling despite a plunge in prices that has poorer members of the organization hurting.
Saudi Oil Minister Ali Naimi told reporters he expects the oil market to eventually “stabilize itself.” That suggests the Saudis, who effectively determine OPEC’s production policy, will not back any calls for reducing output by other nations at Thursday’s oil ministers’ meeting.
The global price of oil has fallen 32 per cent since late June to $78 a barrel, from $115, amid booming shale production in the United States. That, and continued weakness in some major world economies, has led to supply outpacing demand.
While the Saudis can weather such prices, poorer OPEC members like Venezuela and Nigeria need prices closer to $100 to fund national budgets. Iran too is suffering, with the price drop adding to huge revenue losses due to sanctions on it crude sales imposed over its nuclear program.
Non-OPEC member Russia also needs prices substantially above present levels to meet budget goals. Russian energy officials met with representatives from Saudi Arabia, Venezuela and Mexico Tuesday but Venezuelan oil minister Rafael Ramirez said there was no agreement on a joint production cut.