Saudi Arabia’s oil minister has tempered expectations that a recent agreement with some OPEC partners to freeze crude output will lead to a cut in production.
Speaking at an industry conference in the US, Ali Al Naimi said that the lack of trust between OPEC players meant that a production cut “is not going to happen”. Instead, he said Saudi Arabia will push for the co-ordinated freeze in production announced last week.
“There is less trust than normal,” Al Naimi said, in comments reported by the Financial Times. “Not many countries are going to deliver. Even if they say they will cut production, they will not deliver.”
The minister denied that the kingdom was waging a war with high-cost shale oil producers in the US, but also warned them to either cut costs or face bankruptcy.
“The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate,” Al Naimi said.
“It sounds harsh, and unfortunately it is, but it is a more efficient way to rebalance markets. Cutting low-cost production [such as Saudi Arabia’s] to subsidise higher-cost supplies only delays an inevitable reckoning,” he added.
Last week, Saudi Arabia, Qatar, Russia and Venezuela proposed a freeze on production, if other large producers also took part. However, Iran’s oil minister called the plan “laughable”, according to an Iranian news agency report on Tuesday.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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