VIENNA/WASHINGTON, 30 September — Saudi Arabian Oil Minister Ali Al-Naimi delivered a tough message yesterday to anyone who blames OPEC for high oil prices and the deterioration of the world economy — lay off. In a speech to an energy conference, Naimi sought to explode what he said were a number of myths about OPEC — that the producer group dictates the price of oil, practices market extortion and has fueled a global economic downturn with high energy prices.
The Organization of the Petroleum Exporting Countries, in control of just over a third of world production, could not set the price of oil, Naimi said. “No one can claim to have a Midas touch,” he said. “OPEC aims at a preferred target price, and sets the direction to achieve it. While it establishes the price direction, markets through their own mechanism set the pace and scope of price movements.”
And it was not true that OPEC efforts at supporting higher energy prices had caused the downturn in the world economy. “This is simply not the case. The ups and downs of business cycles are a well-established feature in every market economy and are multi-determined by factors that differ from country to country,” the minister said.
Naimi was speaking after OPEC at a meeting this week decided to keep crude output levels unchanged, despite a slump in prices, and to meet again on Nov. 14.
The minister said on Friday that he expected OPEC to move swiftly to cut production before the meeting if prices stay low. Naimi stressed in his speech that OPEC would vigorously defend its target price of $25 for its basket of crudes.
Meanwhile, according to a high-ranking Saudi source in the oil sector in Washington the OPEC decision to leave the oil output unchanged was prompted by the global economic situation following the terror attacks. He said the continuation of present production ceiling at 23.2 bpd despite the sharp fall in the price reflected the understanding of OPEC of the international situation particularly the impact of its decisions on the global economy.
