Saudi Arabia threatens to collapse oil prices to $50 – WSJ
Saudi Arabia’s energy minister has warned that oil prices could fall to $50 a barrel if OPEC+ members in breach of the agreement do not adhere to agreed production limits.
This was reported by OPEC representatives, writes The Wall Street Journal.
Other producers interpreted these statements as a veiled threat from Saudi Arabia: the kingdom is ready to launch a price war to maintain its market share if other countries do not comply with the OPEC+ agreement.
Key members of the alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plan to discuss the possibility of easing production curbs in December during an online meeting on Wednesday.
Oil prices rallied after weeks of steady declines after Iran fired missiles at Israel on Tuesday. Brent crude, the international benchmark, rose 5% but eventually settled 2.4% higher, just below $70 a barrel.
The West fears that the wider conflict could cut off oil exports from the Persian Gulf, which passes through the Strait of Hormuz bordering Iran, pushing up prices.
However, geopolitical tensions have been going on for months without a significant impact on oil prices, and this has frustrated Saudi officials. This is partly because other cartel members have not followed through on plans to curb production for most of this year.
In a conference call last week, Saudi Arabia’s energy minister, Prince Abdelaziz bin Salman, warned other producers that prices could fall to $50 a barrel if they did not meet agreed production cuts.
According to OPEC delegates who attended the call, he particularly emphasized Iraq, which exceeded its quotas by 400,000 barrels per day in August, and Kazakhstan, which plans to increase production thanks to the resumption of the Tengiz oil field with production of 720,000 barrels per day .
The Saudi message was: “There is no point in increasing production if there is no market for it,” said one delegate. “Some should be silent and adhere to their obligations to OPEC+.”
We will remind:
Saudi Arabia is poised to abandon its unofficial oil price target of $100 a barrel as it prepares to increase production and regain market share.
