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

Saudi minister says lack of co-operation a key contributor to decline

An employee looks out over the  petroleum cracking complex at the Lukoil-Nizhegorodnefteorgsintez oil refinery in Nizhny Novgorod, Russia. Crude slumped 18 percent last month as Opec maintained its output quot. Photograph: Andrey Rudakov/Bloomberg

An employee looks out over the petroleum cracking complex at the Lukoil-Nizhegorodnefteorgsintez oil refinery in Nizhny Novgorod, Russia. Crude slumped 18 percent last month as Opec maintained its output quot. Photograph: Andrey Rudakov/Bloomberg

 

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

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

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)