April Brent crude oil futures on London’s ICE Futures exchange dropped by US$1.42, or 4.1%, to settle at US$33.27 a barrel.
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Al-Naimi said that the Kingdom seeks to achieve stability in the oil markets and permanently communicate with all the major producers, in an attempt to reduce volatility to reach a collective consensus and would welcome any collaborative work.
He went on to say that Saudi Arabia would advocate for a freeze in production meant to stabilize a crude oil market that has seen prices plummet from excess supply.
Oil minister Ali al-Naimi says the current crude oversupply should be addressed by less efficient producers. The International Energy Agency is now projecting that “Oil Supply Glut to Last into 2017”.
The falls were a result of squabbling among members of the Organization of the Petroleum Exporting Countries (OPEC) to freeze or cut production and rein in overproduction that has pulled down prices by 70% since mid-2014.
“Those countries that were massive consumers of oil are reducing their consumption”, Lagarde said. The trigger? Oil prices plunged 4% and got close to $30 a barrel – and then raced back to $32.
Overall, any positive oil price impact from this move, beyond a kneejerk covering of short positions, is highly contingent on other key oil producers joining in…
This is in contrast to Al-Naimi’s 16 February statement at a meeting in Qatar, when he said that his country and Russian Federation, the world’s two largest crude producers, had agreed to freeze output.
“Saudi Arabia needs a commitment from everyone”. Both dropped more than 5% in intra-day trading the previous day.
“Some countries that are producing above 10 million barrels per day have called on Iran to freeze its production at one million bpd”, he said.
Asia stocks opened sharply lower on Wednesday, following a sell-off on Wall Street after sentiment took a hit from mixed United States economic data and dashed hopes for an oil production cut.
Higher production costs come from places like the US shale fields, the Canadian oil sands and deep-water drilling projects that were popular when oil was selling for over $100 per barrel.
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“It is in everyone’s best interest if the oil market flourishes”, Sibeveh told Newsweek Middle East following his speech at “How to Invest in Iran” conference.
