'Impossible' for Saudi to reduce oil output: Minister
Saudi Arabia has said it cannot reduce its output and that movements in the global oil price, which has plunged about 50 per cent this year, are to be expected.
"It is difficult, or even impossible, for Saudi Arabia or OPEC to undertake any measure that would lead to a reduction in (their) share of the market and an increase in that of others" who do not belong to the cartel, he was quoted as saying by the official Saudi Press Agency.
"Price fluctuations in commodities, including oil, are normal," the minister added. He said he is "optimistic for the future because the situation that we and the world currently face is temporary".
Crude prices traded above US$100 a barrel earlier this year. They have fallen to multi-year lows since June in the face of a global supply glut, a strong US dollar and slower growth in demand.
Prices plunged even further after the Organisation of the Petroleum Exporting Countries decided last month against cutting production. The cartel pumps about 30 per cent of global crude.
Prices were little changed in Asian trade on Thursday prior to Nuaimi's comments. US benchmark West Texas Intermediate crude for January delivery fell 27 cents to US$56.20. Brent crude for February gained two cents to US$61.20 in afternoon deals.
The oil market has become increasingly competitive with the surge in production from American shale oil fields. Analysts have said that Saudi Arabia is content to see shale oil producers - and even some members of the cartel - suffer from low prices rather than reduce output to boost prices.
OPEC last month reaffirmed its production ceiling of 30 million barrels per day, of which Saudi Arabia is pumping around 9.6 million bpd. Analysts say Saudi Arabia is strong enough to withstand lower prices. On Wednesday, the kingdom said it will continue massive public spending in its 2015 budget which financial analysts say could be approved as early as Monday.
But the drop in oil prices sparked turmoil this week on global stock markets where investors were concerned about the effect on oil firms as well as the crude-dependent economy of Russia. The Russian central bank raised its key interest rate to 17.0 per cent from 10.5 per cent in a bid to prop up the rouble. Russia, a key oil producer which does not belong to OPEC, is also straining under Western sanctions over Ukraine.
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- December 18, 2014
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