A recent meeting of the Organisation of Petroleum Exporting Countries (OPEC) (
www.opec.org) cartel heard that Saudi Arabia will not reduce its oil production levels unless “Iran and others” agree to follow suit.
However, Mohammed bin Salman, the kingdom’s deputy crown prince, said: “If all countries agree to freeze production, we’re ready to do likewise”. On the other hand, he warned: “If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.”
Saudi Arabia recorded a budget deficit in 2015, due to the slump in oil prices. However, at the meeting, the prince said he did “not believe that the decline in oil prices poses a threat to us”.
In fact, he claimed that rising prices are the true “threat to the life-span of oil”. According to the energy correspondent of
The Financial Times, the prince was implying that a significant rise in the price of oil in the future would lead to greater investment in alternative forms of energy.
Industry analysts are united in their opinion that Opec has consistently failed to devise a cohesive strategy to regain control of the oil market, as prices continue to fall. An increase in oil supply — primarily from the USA — has reduced the value of a barrel of Brent crude from a peak of $115 in July 2014 to around $40 today.
Most also believe that Bijan Namdar Zanganeh, Iran’s oil minister, is not in favour of joining any proposed production freeze. During the meeting, it was revealed that Saudi Arabia is considering floating its state-owned oil giant Aramco as early as next year. The much-anticipated initial public offering would see Aramco become the world’s largest publicly traded oil company.
The proceeds are to be placed in a Public Investment Fund, which would “undoubtedly be the largest fund on earth,” said the prince, who believes that Saudi Arabia needs to diversify its investments, so that “within 20 years, we will be an economy that doesn’t depend mainly on oil”.