The Organization of Petroleum Exporting Countries (OPEC) will not cut oil production even if the price drops to $20 a barrel and it is unfair to expect the cartel to reduce output if non-members do not, Saudi Arabia has said.
“Whether it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” Saudi oil minister Ali al-Naimi said in an interview to the Middle East Economic Survey (MEES), an industry weekly.
Naimi defended a decision by OPEC, whose lead producer is Saudi Arabia, last month to maintain a production ceiling of 30 million barrels per day.
The decision sent global oil prices tumbling, worsening a price drop that has seen them fall by 50% since June.
Saudi Arabia pumps about 9.6 million barrels per day but Naimi said it is “crooked logic” to expect his country to cut and then lose business to other major producers outside OPEC.
The increasingly competitive global market has seen US’ daily oil output rise by 40% since 2006, but at a production cost, which can be three or four times that of extracting West Asian oil.
“Is it reasonable for a highly efficient producer to reduce output, while the producer of poor efficiency continues to produce?” Naimi questioned. “If I reduce, what happens to my market share? The price will go up and the Russians, the Brazilians, US shale oil producers will take my share.”
He added it is “unfair” for the cartel to reduce output because it is not the world’s major oil producer. “We produce less than 40% of global output. We are the most efficient producer. It is unbelievable after the analysis we carried out for us to cut.”