Minister of Petroleum and Mineral Resources Ali Al-Naimi said at a meeting of energy ministers in London today that all countries must work together to achieve stability in the energy markets.
"A harsh lesson from today’s concurrent global economic slowdown is that no economy can decouple from the rest of the globe," he said. "It is in everyone’s best interests to work together towards recovery."
Al-Naimi noted that after oil prices skyrocketed to $147 per barrel last summer, Saudi Arabia ramped up its production to balance the market. Since that time, the price of oil has plummeted more than $100 per barrel.
Unfortunately, Al-Naimi said, the price correction has gone too far. "For producers, today’s price levels are wreaking havoc on the industry and are threatening current and planned investments," he said.
Al-Naimi cited $75 as a fair price for a barrel of crude, explaining, "It is the price that marginal producers need to maintain investment sufficient to provide adequate supplies for future oil consumption needs. When oil is priced lower, such as it is now, there will be less investment and less future supply. Eventually, this scenario is followed by a surge in prices."
Stressing the importance of global cooperation, Al-Naimi warned against embracing "the fallacy of energy independence, particularly when it is invoked as a means of reducing reliance on oil imported from a particular region or country."
"Ground is lost when countries attempt to adopt energy policies to reduce oil consumption in a discriminatory fashion," he stated. "Such rhetoric is entirely contrary to the spirit of global cooperation." He added, "We must overcome fear and mistrust, and set aside political and ideological interests."
Al-Naimi vowed that the Kingdom will do its part to ensure adequate oil supplies. "Saudi Arabia is committed to our mega-projects that will increase our maximum sustained production capacity from just over 11 million barrels per day now to 12.5 million barrels per day by next year," he said. "We will proceed undeterred by financial and economic conditions. We are committed to investing to help ensure an uninterrupted supply of energy to the world."