Saudi Arabia won’t stop pumping oil

Mr Naimi described his government’s stance as a “reliable policy” as appetite for the commodity is set to pick up in 2016.

His comments came as the US Energy Information Administration revealed crude inventories had risen by another 2.63m barrels last week.

As a result, Brent crude fell in afternoon trading. The price of a barrel of the world’s benchmark fell by 3.1pc to $36.50, flirting with an 11-year low. Bumper supply means the price of West Texas Intermediate – the American benchmark – may now slump to as little as $20, estimate analysts at Citi.

Mr Naimi’s pledge came just days after Saudi Arabia posted its biggest ever budget deficit of £66bn on the back of collapsing state revenues.

The de facto leader of the world’s 12-member oil cartel, Opec, Saudi Arabia has led the move to drown the world with excess supply in a bid to undercut higher cost rivals such as US shale.

But its members have been divided over the strategy. Opec failed to agree on a formal production ceiling for the first time in recent history last month, after a clash between the kingdom and erstwhile rival Iran.

Tumbling prices forced the Saudis to unveil a bold programme of spending and subsidy cuts in their 2016 budget, as the country’s royal family seeks to consolidate its public finances. Oil revenues make up three-quarters of the government’s revenues.

The supply glut is expected to worsen as Iran intends to export an additional 500,000 barrels-a-day within weeks of sanctions being lifted early next year. Brent has fallen by more than two-thirds in 18 months, from a peak of $115-a-barrel.

Ramped up Iranian production, a mild global winter, and Saudi resistance to cutting supply, has seen prices tumble from $46 at the end of November. Investors are now expected to remain bearish, with Brent averaging just $50-a-barrel in 2016, said Edward Morse at Citi.

Saudi’s Mr Naimi said the kingdom’s consumers – who have been used to record low prices at the pumps – will now be forced to use fuel more “efficiently” in the face of subsidy cuts.

“The result of the programme will be to increase energy efficiency, national economy and create many jobs,” he said.