19th January 2015
Saudi Arabia’s minister of petroleum’s former senior adviser has asserted that the country can cope with low oil prices for “at least eight years”.
Speaking to BBC News, Mohammed al-Sabban urged that Saudi Arabia’s policy was to defend its current market share by enduring low prices.
He said: “You need to allow prices to go as low as possible in order to see those marginal producers move out of the market.”
Saudi Arabia, is the largest Opec oil producer and has stood its ground in the face of the recent plunge in the price of oil, which has halved since June, saying that it will not cut output to push up costs.
Al-Sabban who had advised the ministry for more than a quarter century before stepping down in 2014, said Saudi Arabia’s “huge financial reserves” would enable it to cope with the low oil price. However the country is now in the process of cutting government spending
The marked increase in production from North American shale companies, which has increased the supply of oil and gas, has been blamed for pushing prices lower alongside slowing global economic demand and a rising dollar.
Brent crude is presently trading at circa $49.40 a barrel, and WTI is slightly lower at some $47.95 a barrel.