Naimi says Saudi Arabia wants a fair oil price

OREANDA-NEWS. Saudi Arabia wants an oil price "that is fair for producers, consumers and industry" and provides the oil market with stability, the country's oil minister Ali Naimi said today in a speech at the Beijing Energy Club. But he gave no indication of what price level Riyadh deems as fair.

The halving of oil prices since mid-2014 "presented difficult challenges" for many producers, but the situation for Saudi Arabia "was not dramatically different" because "during the period of high prices, Saudi Arabia saved and invested the revenues wisely," Naimi said. "We fixed the roof while the sun shined," he said.

Naimi acknowledged lower prices are benefiting developing Asian economies. "I have no doubt that these affordable energy supplies will be put to good, productive use across the region."

His words indicate Riyadh sees some benefit in lower prices, expecting them to help boost economic growth and demand for crude in Saudi Arabia's key markets, particularly China. Saudi Arabia's exports to China have grown to around 1mn b/d from "a miniscule 20,000 b/d" of crude 20 years ago, said Naimi.

Saudi Arabia's output rose to 10.3mn b/d in March, according to Argus estimates. That is the highest monthly average Saudi crude production figure on record, and suggests Riyadh has no plans to scale back its policy of securing market share "for high-efficiency producers" ahead of Opec's next meeting on 5 June.

Naimi indicated earlier this month that he expects Saudi output to remain at around 10mn b/d.

In his speech today, Naimi talked up Saudi Arabia's status as "the world's premier supplier of oil".

"We have huge reserves and an unrivalled record of reliability, continuity and quality. We have invested vast sums to maintain a spare capacity which has ensured global oil demand needs are met whatever the challenge. No other country comes close to our dependable and professional approach. We are a stable nation and we have a long-term view."

State-owned Saudi Aramco has a capacity of 12mn b/d.