The United Arab Emirates (UAE) Energy Minister, Suhail Al Mazrouei, on Sunday called for non-OPEC (The Organization of Petroleum Exporting Countries) oil producers to cut their output as excess supplies are harming the market, in addition to slamming them for the reason behind the tumble in oil prices, according to Bloomberg, Reuters, and the WSJ.
The UAE Minister said that the huge drop in oil prices this year will result in a major economic burden on the Arab oil exporting countries.
Saudi Arabia’s Minister of Petroleum and Mineral Resources, Ali al-Naimi, also pointed to non-OPEC countries in addition to the actions of speculators that has led to the fall in oil prices, however he said he was confident that the oil market would improve.
The Saudi Oil Minister denied recent reports that politics played a role in the kingdom’s oil policy and that their policy was not aimed at any specific country.
“Talking about such alleged conspiracies against our country is absolutely incorrect and indicates a misunderstanding in some minds. Our economy is based on strictly economic strategies, no more, no less,” he said.
The Saudi Oil Minister noted that the decline in oil prices would not have “a noticeable and big” impact on the economies of Saudi Arabia or other Arab countries.
Qatar’s Energy Minister, Mohammed Al Sada, told Bloomberg at a conference in Abu Dhabi that the global oil market is oversupplied by 2 million barrels a day.
According to Bloomberg data, OPEC countries have produced around 30 million barrels of oil a day since January 2013 while global output climbed by more than 2 million barrels per day to 93.6 million barrels.
“We call on all other producers to stop the increase because the increase is harming the market,” UAE’s Energy Minister told Bloomberg.
“If the increase stops, and they follow OPEC’s lead, OPEC’s decision is to fix production, if production stabilizes in 2015 things will stabilize much faster,” the UAE Energy Minister added.
“Irresponsible production from outside OPEC is behind the fall in prices,” the UAE Energy Minister said in a speech at the conference.
This year, the price of brent crude has fallen by 45 percent.
In late November, OPEC decided to keep the daily output ceiling unchanged at 30 million barrels, despite a major oversupply and calls from cash-strapped Venezuela.
Last week, the UAE Energy Minister said that he believes that OPEC will continue to stand by its decision not to cut oil output, even if the price of oil should fall to as low as $40 per barrel. In addition, he said that OPEC will wait at least three months before even considering an emergency meeting.
This is ridiculous. Sorry OPEC, you can’t have it both ways. On one hand, OPEC won’t cut production, preferring to let the market set the price. Now, non OPEC should cut. Why? OPEC may have 40% of the world’s production, but add up the 15 largest “For profit” oil companies and you will find this group too produces 40% of the world’s oil. It is interesting to note that the majority of OPEC’s oil fields were found by the U.S./European major oil companies. Sooner or later capitalism will win out. OPEC’s relevance declines every time “Exxon’s” production rises. The OPEC countries have used their oil revenue to build a “social structure” that is costly, maybe too costly. Exxon says they are “prepared for $40”, which when most estimate Saudi needs $60 just to maintain their hold on their population, spells deep trouble for OPEC. Goodbye OPEC, it can’t come soon enough.
John Chadderdon, CEO
Quest Offshore Resources, Inc.
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Posted by John Chadderdon. | December 29, 2014, 2:08 pmIn my humble opinion the price tumble has been driven politically. Here is a very interesting piece. => Oil Coup: The Secret U.S.-Saudi Deal – OpEd
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Posted by ETFalpha | December 29, 2014, 2:25 pm