Saudi Oil Minister Ali al-Naimi said crude prices will rise and foresees that market forces and cooperation among producing nations will lead in time to renewed stability.
“I am optimistic about the future, the return of stability to the global oil markets, the improvement of prices and the cooperation among the major producing countries,” al-Naimi said. “Market forces as well as the cooperation among producing nations always lead to the restoration of stability. This, however, takes some time.”
Al-Naimi declined to comment when asked how the removal of economic sanctions against Iran might affect crude prices. Iran, freed of curbs on its oil exports, plans to boost shipments by 1mn bpd this year.
Led by Saudi Arabia, the Organisation of Petroleum Exporting Countries, which supplies about 40% of the world’s oil, abandoned limits on output on December 4 amid efforts to squeeze higher-cost producers such as Russia and US shale drillers out of the market. The decision contributed to a global glut and led to a further drop in prices. Saudi Arabia produced 10.25mn bpd in December, up 750,000 bpd from the end of last year, according to data compiled by Bloomberg.
Brent crude dropped $1.94, or 6.3%, to $28.94 a barrel on the London-based ICE Futures Europe exchange on Friday. The benchmark grade has dropped 22% this year after tumbling 35% in 2015.
Saudi Arabia, the world’s biggest crude exporter, together with non-Opec producer Mexico have “an especially important role to play,” al-Naimi said yesterday in Riyadh at an event with the Mexican president and energy minister. When oil prices plummeted in 1998, Mexico cooperated with the Saudi Arabia and other suppliers to restore market stability and boost prices, he said.
“Mexico and the kingdom have an especially important role to play in achieving this objective, in the past, at the present, and in the future,” al-Naimi said.
Saudi Arabia would sign an agreement yesterday to cooperate with Mexico in the oil industry, with provisions for exchanging experts, setting up joint ventures and encouraging mutual investments, he said.