Energy, Mena, News, Oil

OPEC Not United in Further Steps to Address Plummeting Prices

Saudi Arabia’s Oil Minister Ali al-Naimi’s comments on the situation in international energy markets from the beginning of this month have left OPEC countries wondering whether to call for a cut in oil production to address the sinking oil prices. The world’s biggest cartel, as OPEC is often called, is meeting in two weeks. Minister Naimi has however confirmed earlier this week that Saudi policy towards the stabilization in oil markets had not changed, though he did not specify what the world can expect from OPEC in response to falling oil prices. The market analysts are generally divided in their opinions on how the cartel will respond to the situation.

The price of oil has plummeted to less than $79 a barrel on speculation that Saudi Arabia is more concerned about its market share following the United States’ energy revolution. An OPEC source took Saudi Minister’s comments as a sign that the Gulf oil tycoon agreed with the opinion of fellow core Gulf country, Kuwait, and others like Iran that output cut is not needed. “The message from the Saudi oil minister is mainly to get support to not support a cut,” the source said and stressed that “There is no price war and the market is fine.” Other OPEC delegates think that Saudi Arabia is actually planning to do everything possible that is needed to balance the market. Mr Naimi’s speech has been described as “positive with some vagueness”. According to Carsten Fritch of Commerzbank, “for as long as the most influential OPEC producer continues to give the impression that it will watch the price collapse without taking any action, the price slide will continue”.

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