Minister of Petroleum and Mineral Resources Ali Al-Naimi, in a speech delivered yesterday at the opening of the 12th annual Crans Montana Forum in southern Switzerland, stressed that the Kingdom has assumed a major role in stabilizing the global oil market and promoting cooperation between the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC states, and between oil producers and oil consumers. He went on to explain that as a result of the collapse of oil prices in 1998, oil-producing countries had realized the importance of cooperating, shouldered their responsibilities equally, and were able to restore stability to the market and attain reasonable prices.[Full text of speech]
Minister Al-Naimi indicated that the oil-producing countries believe the appropriate price currently to be in the range of U.S. $22 to $28 per barrel of OPEC basket. This price, he said, brings suitable revenues to producing countries, and contributes to increased oil exploration that results in meeting world demand for oil, and to a growth that achieves market equilibrium and supply security. He stressed that neither fluctuation of prices nor excessive rise or fall is in the interest of any party, and noted that the drop in oil prices below $10 in 1998 led to a loss of nearly 4 million barrels of producing capacity and a decline of around 30 percent in global oil investments, commenting on the "unnatural' fact that consuming countries impose high taxes on oil products, sometimes as high as 80 percent of the value.
Cooperation between oil-exporting and oil-consuming countries, he said, dates back to the war to liberate Kuwait, when OPEC and the International Energy Agency called for a meeting between the two groups in 1991. The turning point for this cooperation effort was the Seventh International Energy Forum in Riyadh last fall, during which Deputy Prime Minister and Commander of the National Guard Crown Prince Abdullah bin Abdulaziz called for the establishing in Riyadh of a general secretariat for the Forum: this was approved and praised by various countries participating in the conference. Such a secretariat, he explained, would create an atmosphere of mutual confidence between oil producers and consumers through research, appropriate contact channels, conferences and symposiums, that would lead to oil market stability.
Minister Al-Naimi remarked that only Saudi Arabia has the ability to compensate for up to 70 percent of any shortage in the global market, for a period not exceeding three months. Over the years, the Kingdom has contributed to oil market stability by collaborating with other countries, both OPEC and non-OPEC, in order to provide the supplies needed by the market, ensure a reserve production capacity, and restore equilibrium when there is surplus.