Minister of Petroleum and Mineral Resources Ali Al-Naimi reaffirmed Saudi Arabia’s commitment to fostering long-term energy market stability during an address last night at Houston’s Energy Conference.
"We work very hard to make sure that the global oil market is well supplied and well balanced, and to that end it is our ongoing policy to maintain at least 1.5 to 2 million barrels per day of spare capacity," he declared. "Maintaining our spare capacity requires considerable investment, but over the years the value of that cushion has been proven in the face of unforeseen supply disruptions, and it has helped to counter market volatility."
Minister Al-Naimi noted that the current low oil prices are just as unsustainable as last year’s stratospherically high levels. "If today’s low prices continue long enough, they will sow the seeds for future price spikes and volatility," he warned.
He explained that oil prices must be low enough to facilitate economic growth, while high enough to spur industry investment, encourage energy efficiency and justify production from marginal fields, non-conventional sources and renewables.
Minister Al-Naimi singled out three "newly emerging challenges" that have lately contributed to energy market volatility: globalized capital markets, the emergence of energy as an asset class, and climate change. All of these challenges, he said, require global cooperation.
"For over half a century, Saudi Arabia and the United States have shared a commitment to work together in areas of mutual interest," he stated. "Our long-term relationship in energy has paid great dividends for the health of the global economy, the stability of oil markets and for our respective societies. Working together we can build on these successes to provide the foundation for a strong, sustainable economic recovery and a bright future."Full text of speech