Al-Naimi: ‘We have not declared war on shale’
Petroleum and Mineral Resources Minister Ali Al-Naimi said on Tuesday he was confident more nations would join a pact to freeze output at existing levels in talks expected next month, but effectively ruled out production cuts by major crude producers any time soon.
Addressing the annual IHS CERAWeek conference in Houston, Al-Naimi told global energy executives that growing support for the freeze and stronger demand should over time ease a global glut that has pushed oil prices to their lowest levels in more than a decade.
It was Al-Naimi’s first public appearance in the US since the Organization of Petroleum Exporting Countries’ meeting in November 2014.
He said the Kingdom welcomed “all sources of supply,” including shale.
“We have not declared war on shale or any given country or company, contrary to all the rumors,” Al-Naimi said in the speech.
“We are hopeful that the nimbleness and responsiveness demonstrated by shale oil producers will continue. These supplies may be needed quickly once markets balance and tighten.”
Al-Naimi also reiterated his longstanding position that Saudi Arabia was ready to meet the demand of its customers, maintaining a cushion of spare production capacity and remaining open to “cooperative action” with other producers to create a stable oil market.
He added: “A freeze is the beginning of a process. If we can get all the major producers to agree not to add additional barrels then this high inventory we have now will probably decline in due time,” said Al-Naimi.
But he was emphatic markets should not view the agreement as a prelude to production cuts, saying there was not enough trust to get such a deal.
“That is not going to happen because not many countries are going to deliver,” Al-Naimi said during a Q&A session after his speech.
“Even if they say that they will cut production they will not do it. There is no sense in wasting our time seeking production cuts. They will not happen.”
Oil prices have fallen 70 percent since mid-2014 as surplus crude piled up.
“We are doing what every other industry representative in this room is doing. We are responding to challenging market conditions and seeking the best possible outcome in a highly competitive environment.”