LONDON: Saudi Arabia reiterated on Tuesday oil prices between $70 and $80 a barrel are acceptable to all, saying this price does not hamper global economic growth.
Minister of Petroleum and Mineral Ali Al-Naimi was speaking in a video interview posted on the website of the International Energy Forum. The IEF issued a press release on Monday referring to the interview.
“The producer is looking at this price, the consumer is looking at the price, the investor is looking at the price and everybody is saying this is great,” Al-Naimi said in the interview.
“More importantly, economic growth is not hampered, this is very important. So that’s why I said it is almost a perfect price.”
Saudi Arabia has previously said oil at $70 to $80 is reasonable and many of its fellow OPEC members have voiced support for that level, which analysts say effectively puts a floor of $70 under the oil market.
Oil prices dropped Tuesday on concerns major energy consumer China will make further moves to tighten credit.
New York’s main futures contract, light sweet crude for delivery in March, slid 37 cents to $74.89 a barrel.
London’s Brent North Sea crude for March delivery decreased by 31 cents to $73.380 in late afternoon deals.
The Saudi minister said $70 to $80 was not a “band” or a formal target. The Organization of the Petroleum Exporting Countries set price bands in the past, but abandoned the policy.
“We’re not talking about a band, we’re talking about a de-facto situation,” Naimi said. “It just happens that this is a good range for everybody and I think there is an agreement.”
Policymakers in China have taken steps to tighten credit lending in a bid to slow down its roaring economy, which grew by a sizzling 10.7 percent in the fourth quarter of last year.
China is the world’s second biggest oil consuming nation after the United States. World oil demand grew between October and December after sliding during the previous five quarters, the London-based Center for Global Energy Studies said in a monthly report published on Tuesday.
“Global oil demand has finally turned the corner, with oil use in the fourth quarter of 2009, up on the fourth quarter of 2008, after five consecutive quarters of year-on-year decline,” the CGES said. “The recovery in oil use remains fragile, though, and concentrated in developing countries.”
However, the CGES predicted that supply and demand conditions would not warrant higher prices this year.
“Despite rising demand, market fundamentals are not expected to support upward pressure on oil prices in 2010.”
The CGES also warned that “temporary” factors had boosted the world oil market in recent months. “The recent surge in oil demand has been boosted by temporary seasonal factors, driven by extremely cold weather across much of the northern hemisphere, which is unlikely to last beyond the end of the first quarter.”
The global financial crisis, and subsequent worldwide recession, had sent energy demand plunging, with prices diving to $32 in December 2008. But crude prices surged by about 80 percent in 2009 as the market was boosted by signs of global economic recovery.
