Saudi Oil Minister: Only markets determine oil prices

Saudi Oil Minister Ali Al-Naimi said only market determine oil prices, ruling out any intervention by OPEC to increase them.

Al-Naimi told reporters on the sidelines of a mining conference in the Saudi capital Riyadh yesterday: “Prices are a function of supply and demand, and allowing energy prices such as gasoline to rise is one of the biggest economic reforms in Saudi Arabia for many years.”

The Saudi minister made no further comment about oil prices which have fallen by more than half since the beginning of last year, reaching less than $50 a barrel.

Saudi Arabia, which is OPEC’s largest producer, has traditionally acted to stabilise the market by adjusting output.

However, analysts believe this is a bid by the Gulf kingdom to push out new players, in particular US shale producers.

OPEC said in its monthly report in October that market pressures appear to be easing.

“Fundamental factors of supply and demand that have weighed on the market for more than a year have persisted, but are starting to show signs of alleviation,” it said.

GCC Assistant Secretary-General for Foreign Affairs Abdel Aziz Aluwaisheg estimated that the GCC’s losses from the decline in oil prices would reach $300 billion, but noted “the increased contribution by non-oil sectors to the bloc’s economies”.

Aluwaisheg stressed that there is no reason to panic because of the decline in oil prices considering the large size of the surpluses achieved by the GCC countries in the past years, estimated to have reached $502 billion in addition to the assets owned by these countries.