Middle-east Arab News Opinion | Asharq Al-awsat

Oil Producers Await a Change in Saudi Stance | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page
Media ID: 55359025

An oil pump jack pumps oil in a field near Calgary, Alberta, July 21, 2014. Pump jacks are used to pump crude oil out of the ground after an oil well has been drilled. REUTERS/Todd Korol

Khobar- Saudi Arabia has been adopting since 2014 a clear oil policy that is based on maintaining market share and letting the market fix itself by itself. This policy depends on the philosophy which says that prices might not rise – then Saudi Arabia might lose the prices and the share as well, according to Former Saudi Oil Minister Ali al-Naimi.

Saudi Energy Minister Khaled al-Faleh said during his visit to the U.S. in August that there is no need for any action because the market is on track with regards to balance and correction.

The Saudi strategy has caused a crack in OPEC, especially when it comes to the poorest members that suffered a crisis in budget and other troubles. Riyadh and the Gulf allies were compelled to rationalize expenses after ten years of generous spending.

Pressures put on Saudi Arabia to take an action increased especially by OPEC oil exporting countries such as Venezuela, whose economy is almost collapsing. Russia as well is pressuring the Kingdom to correct the market through a bunch of statements by Russian officials.

On an economic level, the Kingdom is passing through a tough economic condition; yet other than the economic and political pressure there is also the technical one. OPEC amended its forecasts for this month, expecting that the market will not revive in the first half of 2017.

In adverse, the correction process might take long which makes it an urgent need that OPEC takes an action.