Opec oil output will not be cut even if price hits $20
- 23 December 2014
- From the section Business
Saudi Arabia's oil minister, Ali al-Naimi, has said oil producers' cartel Opec will not cut production even if the price falls to $20 a barrel.
His comments reinforce Opec's recent policy change away from restricting output as prices fall.
In November, Opec [Organization of the Petroleum Exporting Countries] said it would keep its target output at 30 million barrels per day.
The Brent crude oil price has fallen by more than 46% since its $116 June peak.
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," he said.
The world might not see the oil price back at $100 a barrel again, he added.
While alternative sources of crude oil, such as shale and tar sands, have caused a big increase in supply, some analysts argue that the oil price collapse is more to do with falling demand due to a slowing global economy.
Danny Gabay of Fathom Financial Consulting told the BBC that the oil price fall was "overwhelmingly, predominantly, if not entirely, a demand shock. It's China slowing down. The supply element is more of a reaction."
International Monetary Fund (IMF) economists have speculated that the low oil price could boost the global economy by up to 0.7% in 2015.
"Overall, we see this as a shot in the arm for the global economy," said Olivier Blanchard, the IMF's chief economist.
Similarly, Opec producers believe the oil price could return to about $70 or $80 by the end of 2015 as global economic recovery boosts demand.