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Page added on November 26, 2014

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Saudi Arabia Says Oil to Stabilize


Saudi Arabia’s oil minister said crude prices will stabilize while the United Arab Emirates said OPEC will do what it takes to balance the market. Angola predicted the 12-nation group will reach a consensus when it meets tomorrow.

The “market will stabilize itself,” Ali Al-Naimi, the Saudi minister, told reporters in Vienna today. The world’s largest oil exporter yesterday failed to agree a plan with Russia, Venezuela and Mexico to curb output. Iran’s oil minister said there is an oversupply of crude.

Oil ministers from the 12 nations in the Organization of Petroleum Exporting Countries will discuss their combined production after prices plunged 32 percent since June. Crude fell in part on speculation that Saudi Arabia and other OPEC states wouldn’t take the necessary measures to curb a surplus.

“I am confident that we will take the right decision to stabilize the market,” U.A.E. Energy Minister Suhail Al-Mazrouei said in an interview in the Austrian capital today. “The market is getting bigger. OPEC is not targeting a certain price.”

Brent crude rose 0.1 percent to $78.42 a barrel at 11:45 a.m. in London today. Its highest close this year on the ICE Futures Europe exchange was $115.06 a barrel on June 19.

Photographer: Joe Klamar/AFP via Getty Images

Saudi Arabia’s oil minister Ali Al-Naimi told reporters, “No one should cut and market… Read More

$60 a Barrel

“Al-Naimi says oil will stabilize, but at what price?” Olivier Jakob, managing director of Zug, Switzerland-based consultancy Petromatrix GmbH, said by e-mail. ‘That is the question that the market needs to find the answer to.’’

The oil market is oversupplied and managing this will require non-OPEC countries to cooperate with the group, Iranian Oil Minister Bijan Namdar Zanganeh told reporters today in Vienna. Iran is not planning to cut production, he said.

Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters there is no need to panic despite a surplus, adding that he expects OPEC to reach a consensus decision.

While supply currently exceeds demand, Russia wouldn’t need to cut output even if prices fell below $60 a barrel, Igor Sechin, a former Russian deputy prime minister and the head of the country’s largest oil producer OAO Rosneft, told Bloomberg TV yesterday.

Sechin was among officials from Saudi Arabia, Venezuela and non-OPEC members Russia and Mexico who met yesterday to discuss the oil market. The countries, together responsible for one-third of global output, agreed to monitor prices for a year rather than curb production.

“If OPEC does not cut production, then Brent would come under further pressure, possibly falling closer to $60-$70,” Abhishek Deshpande, an oil markets analyst at London-based Natixis, said by e-mail today.


8 Comments on "Saudi Arabia Says Oil to Stabilize"

  1. Davy on Wed, 26th Nov 2014 8:19 am 

    Maybe oil will stabilize if the global economy stabilizes. What we have now is not stability nor do I see stability in the cards.

  2. JuanP on Wed, 26th Nov 2014 8:50 am 

    The “market will stabilize itself”, says Ali Al-Naimi.

    I will get a pink unicorn for Christmas, says JuanP.

  3. Aaron on Wed, 26th Nov 2014 9:12 am 

    “While supply currently exceeds demand”

    I thought supply and demand were always equal and it was just the price that altered to bring them both in line. Or is supply actually greater than demand? Is the extra being stored in tanks somewhere?

  4. paulo1 on Wed, 26th Nov 2014 10:35 am 

    Who goes first? KSA domestic insurgencies or will everyone share the blame…ooops pain? These guys need the money to keep their populations quiet.

    (Good opportunity to sell more arms for the merchents of death).

  5. shortonoil on Wed, 26th Nov 2014 12:10 pm 

    Long term, oil prices are now in decline; 2012 was the crossing of the Rubicon for our petroleum powered civilization:

    Of course, we should have been planning for this 30 or 40 years ago; history has not be stingy on its lessons of what inevitably happens to a finite resource. The cricket, and the ant story of our childhood was intended to educate us on how to prevent this very day. But the luxurious life provided by oil, for at least a few, was too much of a seductress for mere mortals to resist. So now we must play the part of the cricket in that eternal story. Winter is coming in the land of oil, and we have barely set aside a fagot of wood to heat our toes.

  6. shortonoil on Wed, 26th Nov 2014 2:48 pm 

    [b]“While supply currently exceeds demand”[/b]

    Even according to EIA numbers conventional crude production has not increased since 2005. Half of the shale production will not produce transportation fuels, and all the major fields in the world are either not growing, or are in decline. The balance of the increased supply is NGLs.

    There is no increase in supply as the above comment would suggest. What has happened is that petroleum reached a price that could not be supported by the economy, so the price fell. This is not a one time situation, petroleum prices are going down to compensate for its falling value to the economy. Its called [b]DEPLETION[/b]!

    Production energy costs are going up, and what remains for the rest of the economy is going down! Its really very simple?

  7. Northwest Resident on Wed, 26th Nov 2014 3:19 pm 

    19 US Shale Areas That Are Suddenly Endangered, “The Shale Revolution Doesn’t Work At $80”

    A graphic with 19 shale locations and the break-even sales price those locations need. And this quote:

    “Everybody is trying to put a very happy spin on their ability to weather $80 oil, but a lot of that is just smoke,” said Daniel Dicker, president of MercBloc Wealth Management Solutions with 25 years’ experience trading crude on the New York Mercantile Exchange. “The shale revolution doesn’t work at $80, period.”

    Also: Isn’t it interesting that about the same time that Bakken is running out of sweet spots (see, we have a dramatic drop in oil price and the OPEC meeting with all the drama. Coincidence?

    Note to shortonoil: To bold text, you need to wrap the text with the “” and “” characters in place of the “[” and “]” characters. Just a tip from a guy who does html coding every day… 🙂

  8. Perk Earl on Wed, 26th Nov 2014 4:28 pm 

    “What has happened is that petroleum reached a price that could not be supported by the economy, so the price fell.”

    Looks that way, short. Price has stabilized lately and I’m curious like everybody else to see where it goes from here. My conjecture is there is room to go back up some in the range of 90-95 a barrel, but from here the highs and lows continue an undulating trend downward.

    Even if that is the situation, (I.e. not continue a price drop from here scenario), this is a pretty big deal. We are definitely getting into a period of consequences on this latter part of this plateau.

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