Opec blames outsiders for near-50% slide in oil prices

Saudi Arabia and the United Arab Emirates have blamed the rout in oil prices on producers outside Opec and reaffirmed their stance to hold output at current levels.

Ali al-Naimi, Saudi Arabia’s oil minister, said a lack of co-operation from countries outside the cartel was a key contributor to the near 50 per cent slide in crude prices since the middle of June.

“The kingdom of Saudi Arabia and other countries sought to bring back balance to the market, but the lack of co-operation from other producers outside Opec and the spread of misleading information and speculation led to the continuation of the drop in prices,” he said at a conference in Abu Dhabi on Sunday.

At the same gathering Suhail Al-Mazrouei, the energy minister for the UAE, said one of the big reasons for the decline in prices was “the irresponsible production of some producers from outside Opec”.

No change

The comments from the two Gulf producers point to no imminent change in production targets that stand at 30m barrels day, despite calls from some poorer members of Opec to reduce output to shore up prices.

Opec’s stance on production and concerns about a supply glut have seen the price of Brent crude – the international oil benchmark – fall below $60 a barrel, hitting its lowest level in more than five years last week. At the conference, Mr Al-Mazrouei echoed a previous statement made to reporters, saying “Opec is not a swing producer” and “it’s not fair that we correct the market for everyone else”.

The UAE is thought to have the closest views to Saudi Arabia, a fellow Gulf ally as well as the cartel’s largest producer and de facto leader.

Oversupply

Ahead of last month’s Opec meeting in Vienna, Mr Al-Mazrouei said: “Yes, there is an oversupply but that oversupply is not an Opec problem.”

He also said non-Opec countries and high-cost production – such as oil from US shale fields – should now play a role in balancing the market. In turn, lower prices will help to shave off excess supplies from more expensive oilfields. The “market will fix it,” he said in November.

Mr Naimi said for the second time in a week that he was “confident the oil market will improve”, adding that the price slide will not have “a noticeable and big” impact on Saudi Arabia’s economy.

Mr Naimi has been criticised domestically for his failure to communicate properly the thinking behind the decision to hold production at current levels. The dramatic fall in the price of oil has eaten into the country’s savings and roiled its stock markets.

– (Copyright The Financial Times Limited 2014)