No conspiracy behind oil price fall: Al-Naimi
No conspiracy behind oil price fall: Al-Naimi
World prices have fallen almost 50 percent since June, mainly due to a supply glut, the weak global economy and a strong US dollar.
UAE energy minister Suhail Al-Mazrouei, in a clear reference to shale and sand oil output from North America and other emerging energy markets, attributed the price dive to “newcomers.”
“One of the main causes is irresponsible production by some producers from outside the (OPEC) organization,” he told an energy forum in Abu Dhabi.
The global oil market has become increasingly competitive in recent years with the surge in shale and sand oil production from countries outside the decades-old OPEC alliance.
Saudi Oil Minister Ali Al-Naimi also lashed out at non-OPEC members, claiming the global price fall on a “lack of cooperation by main producing countries outside OPEC, misleading information and speculators’ greed.”
In a further reference to shale oil, Naimi predicted that “high-cost producers will not continue to increase production.”
Last month, OPEC decided to maintain production levels of 30 million barrels per day despite pleas by some members to cut output in a bid to curb sliding prices.
Mazrouei defended the measure, which he said would stabilize oil markets.
“OPEC’s decision, which aims to provide the market with time to rebalance, is correct, strategic and useful to the global economy,” he added.
'No Saudi plot'
Naimi dismissed claims of a Saudi “plot” to push prices down for political goals, insisting that the kingdom’s policy is “based on pure economic principles.”
Unlike rich Gulf members of the cartel, non-Arab OPEC members lack the sovereign wealth funds to smooth over oil price fluctuations and have budgeted for price scenarios now radically out of sync with reality.
Russia and OPEC-member Iran, whose economies rely heavily on oil revenues, have spoken of a market conspiracy to hold prices down after OPEC’s decision to keep output steady.
Analysts have said Saudi Arabia is content to see shale oil producers — and even some OPEC members — suffer from low prices rather than reduce output to boost prices.
Countries such as Nigeria and Venezuela have also been hit hard by the downturn.
“Recently, certain analyses and articles have spoken of a politically motivated Saudi plot, using oil and its prices against this country or that... This is baseless,” Naimi said.
“I am confident that oil markets will recover... and that oil prices will improve,” he added.
Qatar’s energy minister, Mohammed Al-Sada, also sounded upbeat, arguing that tumbling oil prices represented a “temporary correction.”
He warned however that prices at their current level could “weaken investment” in production capacity needed to meet future demand.
“The growing demand for energy necessitates huge investments,” he said.
Although prices rebounded sharply on Friday from four-year lows — with the benchmark price just over $60 a barrel — analysts say Gulf countries are bracing for a sharp decline in oil revenue.
Pumping about 17.5 million barrels per day, the countries are forecast to lose at least half their income from oil, or around $350 billion a year, at current price levels.
Volvo quits Iran as US sanctions pressure mounts
- Volvo cannot get paid in Iran due to US sanctions
- Plans were for at least 5,000 trucks to be assembled in Iran Saipa Diesel says zero Volvo trucks assembled since May
STOCKHOLM, Sweden: Swedish truck maker AB Volvo has stopped assembling trucks in Iran because US sanctions are preventing it from being paid, a spokesman for the company said on Monday.
The sanctions against Iran, reimposed on Aug. 6 by US President Donald Trump after his decision to pull out of a nuclear deal with Tehran, have forced companies across Europe to reconsider their investments there.
Volvo spokesman Fredrik Ivarsson said the trucks group could no longer get paid for any parts it shipped and had therefore decided not to operate in Iran in another blow to the country’s car industry, which unlike the energy and banking sectors, had managed to sign contracts with top European firms.
“With all these sanctions and everything that the United States put (in place) ... the bank system doesn’t work in Iran. We can’t get paid ... So for now we don’t have any business (in Iran),” Ivarsson told Reuters by telephone.
Before the sanctions were reimposed, Volvo had expressed an ambition for Iran to become its main export hub for the Gulf region and North Africa markets.
The European Union has implemented a law to shield its companies, but the sanctions have deterred banks from doing business with Iranian firms as Washington can cut any that facilitate such transactions off from the US financial system.
Volvo was working with Saipa Diesel, part of Iran’s second-largest automaker SAIPA, which was assembling the Swedish firm’s heavy-duty trucks from kits shipped to Iran.
Ivarsson said Volvo had no active orders in Iran as of Monday.
A commercial department manager at Saipa Diesel confirmed that sanctions had prompted Volvo Trucks to terminate their partnership agreement.
“They have decided that due to the sanction on Iran, from (May) they couldn’t cooperate with us. We had some renovation planned in Iran for a new plant but they refused to work with us,” said the manager, who declined to be identified.
More than 3,500 Volvo trucks had been assembled by Saipa Diesel in the year to May, but none had been assembled in this financial year although the original deal was for at least 5,000 trucks, the manager told Reuters.
Swedish truckmaker Scania, which is owned by Volkswagen , said it had canceled all orders that it could not deliver by mid-August due to sanctions, while French carmaker PSA Group began to suspend its joint venture activities in Iran in June.
Germany’s Daimler has said it is closely monitoring any further developments, while carmaker Volkswagen has rejected a report that suggested it had decided against doing business in Iran.