MILAN (Reuters) – The price of oil will probably keep falling as long as Saudi Arabia resists pressure from other OPEC member states to cut production, according to the country’s former oil minister.
Sheikh Ahmed Zaki Yamani told Italian daily Corriere della Sera in an interview published on Tuesday member states that were only interested in keeping the price high had already cut production.
“They are already under their quota, so a cut (that would make a difference to the price) must above all come from Saudi Arabia,” he said.
Asked if Iran and Venezuela were among those pushing for a cut, he said: “Also Libya, Algeria and even Nigeria.”
Oil rose on Tuesday, approaching $75 a barrel on expectations that member states of the Organization of the Petroleum Exporting Countries (OPEC) would agree to a cut at a meeting on Friday.
Yamani said the price had fallen in recent months because of lower demand in the face of the global economic crisis.
“The crisis will again push down prices and those same (OPEC) countries will want to cut again,” he said. “It is a very serious issue. There is the risk of a spiral. The pressure on Saudi Arabia can benefit some in OPEC but it can’t last forever.”
If the price were to fall below $70 or $65, OPEC member states would begin to suffer because they had increased salaries and begun big projects based expectations that the price would remain high, he said.
“Saudi Arabia is coming to the point that if the crisis starts to (worsen) it will not even have enough liquidity to pay for public administration,” he said.
Yamani also said Europe had nothing to fear from sovereign funds from the Gulf acquiring its companies.
“Our income is falling,” he said. “On that front, you westerners can relax.”