Al-Falih speaking at the Global Competitiveness Forum yesterday (Asharq Al-Awsat)

The Saudi Minister of Health and the Chairman of the Board at Saudi Aramco Khalid Al-Falih stressed that Saudi Arabia has the strength to survive the current decline in oil prices “for a very long period of time” due to the fact that Saudi Arabia is one of the lowest cost producers. Not only that, but it intends to reduce its costs even more so that it has even longer staying power.

Al-Falih told reporters in Riyadh yesterday on the side lines of the Global Competitiveness Forum that “Saudi Arabia is well-documented to be the clear lowest- cost producer – we have scale, capabilities and technology to help us maintain our low cost as we go forward”.

Many market players believe that Saudi Arabia’s current policy of keeping its production high to meet customer demand is one of the reasons for the glut in global supply as Saudi Arabia produces approximately 10.2 million barrels a day. However, Al-Falih denied the validity of these assumptions and analyses by saying “Saudi Arabia does not throw its oil onto the market just like that. All of our production goes to the final consumer and we don’t have production that goes to traders or clients. You will not find a single barrel of Saudi oil without a prior buyer for it”. Al-Falih also touched upon prices and said that global oil supply and demand will ultimately balance at a “moderate” price. However, he did not say at what price levels equilibrium would be achieved but that he expects that equilibrium will be achieved before long. Al-Falih also said that Riyadh does not intend to cut supply in order to support prices.

Al-Falih said a few days ago whilst attending the Davos Economic Forum that the current oil price of $30 is “illogical”. He added that “demand will grow as it did in 2015 and there will be a period in the near future where supply and demand will be in equilibrium.