Millennium Post

Saudi hint: Excess oil supply, low price not designed to hit Russia

Saudi Arabia, the largest producer in the OPEC oil cartel, cannot reduce its output because of competitive pressure despite plunging prices, the kingdom's oil minister said on Thursday.

Ali al-Nuaimi denied that "political objectives" play a role in decisions about production, and expressed optimism for the future despite crude's price drop of about 50 per cent since June.

"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 said in comments to the official Saudi Press Agency. Nuaimi said that while OPEC's output has not changed in years, production by non-cartel nations "has been increasing constantly".

He added that price fluctuations "are normal" for commodities including oil.

"The situation that we and the world currently face is temporary," Nuaimi said, citing a combination
of factors including slower global growth, increased supply, and reduced demand growth for oil. "The global economy, particularly the economies of emerging countries, will resume growth steadily, and then demand for oil will also grow."

Crude prices traded above $100 a barrel earlier this year but have fallen to multi-year lows since June. Prices plunged even further after the Organisation of the Petroleum Exporting Countries decided last month against cutting production.
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