Saudi Arabian Oil Minister Ali al-Naimi said in Cairo on Dec. 21 that “demand matches supply” in the global market and earlier that month described prices, which were about $107 a barrel in London, as “fine.”
Al-Naimi has several times cited $100 a barrel as a suitable level for consumers and producers. The kingdom needs a level of about $80 to cover its budget requirements, according to consultants Petromatrix GmbH in Zug, Switzerland.
Demand for the kingdom’s crude in Asia remains “steady,” said Sadad al-Husseini, who founded and runs Husseini Energy, an independent energy consultant in Dharan, Saudi Arabia, after retiring from Saudi Aramco in 2004. The recovering U.S. economy and fuel consumption within OPEC members will “put pressure” on the nation to maintain output, al-Husseini said.
OPEC’s Secretary-General Abdalla El-Badri urged the group’s 12 members after their last meeting in December to trim output in order to comply with a collective target of 30 million barrels a day. The group will next gather in May.
“OPEC’s ceiling is one of the reasons but not the major drive for the cuts,” Fahd al-Turki, chief economist of Jadwa Investment Co., said by phone from Riyadh. “The major driver for the Saudi cuts is a reduction in domestic demand.”