Opec to retain oil production levels despite falling price
City Index December 23, 2014 4:26 PM
<p>Saudi Arabia’s oil minister has stated that Opec will not cut oil production even if prices drop below $20 a barrel.</p>
The Organization of Petroleum Exporting Countries (Opec) will not cut oil production even if prices drop below $20 (£13), according to Saudi Arabia's oil minister.
Ali al-Naimi explained that a decision to reduce the cartel's output would be irrelevant when it came to price. It means that Opec will continue to produce the same amount despite the value of oil slumping dramatically over 2014. In the space of a year the price of Brent crude and US crude has halved.
Speaking to the Middle East Economic Survey, Mr al-Naimi said: "As a policy for Opec – and I convinced Opec of this, even Mr al-Badri [Opec secretary general] is now convinced – it is not in the interest of Opec producers to cut their production, whatever the price is. Whether it goes down to $20, $40, $50, $60, it is irrelevant."
The price of oil has been a contentious point in recent months. In November, a meeting of Opec members discussed the possibility of reducing production to attempt to stimulate prices. Both Saudi Arabia and the United Arab Emirates had been against a cut while non-member Russia also opposed a change.
Despite being support from other members for a reduction the decision was made to keep oil prices at their current level. This standpoint was reinforced earlier in December when Mr al-Badri stated that a change in the price would not dictate the oil output of the member nations. His comments came as Brent crude fell to a five-year low.
Russia relies heavily on the performance of the oil markets. The country generates revenue from oil export sales and the falling prices have impacted on its economy. Combined with tightening Western sanctions and the tumbling value of the rouble, Russia is standing on the brink of recession.
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