Saudi Arabia, the largest producer in the OPEC oil cartel, cannot reduce its output because of competitive pressure despite plunging prices, the kingdom's oil minister said today.
Ali al-Nuaimi denied that "political objectives" play a role in decisions about production, and expressed optimism for the future despite crude's price drop of about 50 per cent since June.
"It is difficult, or even impossible, for Saudi Arabia or OPEC to undertake any measure that would lead to a reduction in (their) share of the market and an increase in that of others" who do not belong to the cartel, he said in comments to the official Saudi Press Agency.
Nuaimi said that while OPEC's output has not changed in years, production by non-cartel nations "has been increasing constantly".
He added that price fluctuations "are normal" for commodities including oil.
"The situation that we and the world currently face is temporary," Nuaimi said, citing a combination of factors including slower global growth, increased supply, and reduced demand growth for oil.
"The global economy, particularly the economies of emerging countries, will resume growth steadily, and then demand for oil will also grow."
Crude prices traded above USD 100 a barrel earlier this year but have fallen to multi-year lows since June.
Prices plunged even further after the Organisation of the Petroleum Exporting Countries decided last month against cutting production.
The cartel pumps about 30 per cent of global crude.
Oil markets gained today after recent volatility.
US benchmark West Texas Intermediate crude for January delivery jumped USD 1.76 to USD 58.23 a barrel, while Brent North Sea crude for February rose USD 1.97 to USD 63.15.
The oil market has become increasingly competitive with the surge in production from American shale oil fields.
Analysts have said that Saudi Arabia is content to see shale oil producers - and even some OPEC members - suffer from low prices rather than reduce output to boost prices.
OPEC last month reaffirmed its production ceiling of 30 million barrels per day, of which Saudi Arabia is pumping around 9.6 million bpd.
Analysts say Saudi Arabia is strong enough to survive lower prices, a point also made by Nuaimi.
He said factors including the kingdom's "huge financial reserves" help it to withstand short-term variations in oil income.
Yesterday Finance Minister Ibrahim bin Abdulaziz al-Assaf said his country will continue massive public spending in its 2015 budget which financial analysts say could be approved as early as Monday.
