Saudi Arabia Satisfied with Recent Reductions in Oil Prices

Saudi Arabia is contented that the oil price per barrel has dropped to a level that doesn’t limit global development, according to the recent statement of the kingdom’s oil minister, Ali Al Naimi, prompting success in the country’s effort to control the price of oil in spite of reduced Iranian exports due to Western sanctions.

In a Riyadh meeting of the Arabian Gulf’s energy ministers, al-Naimi said that their nations have placed plenty of effort to restore the stability of the world oil market, an accomplishment that has been truly achieved. Al-Naimi added that stability has been brought back and that current oil prices are back to levels that are acceptable for both producing and consuming countries and to the world economy and its growth.

Saudi Arabia, the OPEC’s biggest crude producer, increased its output to its highest level in 30 years, to about 10 million barrels daily. That helped make up for the reduction of Iranian exports. UAE and Kuwait, both allies of Riyadh, supported production increases as well.

Sanctions versus the nuclear program of Iran had threatened to surge the oil price per barrel. That would have further slowed down the growth of Western economies and diluted the effect of US and EU measures on the oil revenues of Iran.

However, the additional volumes coming from Riyadh have helped compensate for the reduction of Iranian exports and overturned a surge in costs that brought the price of Brent to $128 per barrel last March. The most recent price of Brent is around $112 per barrel.

“We kept our policy of calming market worries, providing additional supply when required and controlling high fluctuations in prices during the subsequent months up to this day,” said the oil minister. He did not mention Iran in the speech addressed to the Gulf Cooperation Council’s energy ministers.

When asked if the goal was to cut (Brent) current oil prices to $100 per barrel, al-Naimi said that Iraq may be able to soon double its production.

In the meantime, Iraq is ready to increase the production of oil by more than fifty percent, to 6.1 million barrels daily by 2020, providing for about half of the rise in global inventories this decade, according to the IEA.