Saudi Arabia is determined to stick to its policy of pumping enough oil to protect its global market share, despite the financial pain inflicted on the kingdom’s economy.
Officials have told the Financial Times that the world’s largest exporter will produce enough oil to meet customer demand, indicating that the kingdom is in no mood to change tack ahead of the December 4 meeting in Vienna of the producers’ cartel Opec.
‘The only thing to do now is to let the market do its job,’ said Khalid al-Falih, chairman of the state-owned Saudi Arabian Oil Company (Saudi Aramco). ‘There have been no conversations here that say we should cut production now that we’ve seen the pain.’
Saudi Arabia rocked oil markets last November when Opec decided against production cuts, making clear that the kingdom was abandoning its policy of reducing supplies to stabilize the price.
Since then, the oil price has collapsed from a high of $115 a barrel last year to $50 a barrel.
Global oil companies, which have put hundreds of billions of dollars of investment on hold as a result of low prices, will be disappointed by the Kingdom’s stance.
This post was published at David Stockmans Contra Corner on November 9, 2015.