Saudi oil minister to struggling producers: ‘get out’ of the market

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Saudi Arabia’s oil minister had a message for high-cost producers on Feb. 23: Saudi is quite content to ride out low prices and those who aren’t should “get out” of the market.

Saudi Arabia’s Minister of Petroleum & Mineral Resources Ali Al-Naimi speaks at the annual IHS CERAWeek global energy conference Tuesday, Feb. 23, 2016, in Houston. (AP Photo/Pat Sullivan
Ali Al-Naimi speaks at the IHS CERAWeek global conference on Feb. 23.  /AP/Pat Sullivan

“Inefficient, uneconomic producers will have to get out, that is tough to say, but that’s fact,” Ali Al-Naimi said after a speech at the IHS CERAWeek global energy conference in Houston, Texas.

Al-Naimi insisted the oil supply glut was not caused by Saudi Arabia, but by high prices that caused “every barrel on Earth” to be produced.

Asked about last week’s announcement that Saudi, Russia, Venezuela, and Qatar had frozen production, Al-Naimi said “there is a common sense and there is a need for more money, and I think those two things will cause maybe not all of the countries, but most of the countries that count to freeze.”

Al-Naimi said that one meeting had been held, and that emissaries were sent to other countries and that he was hoping for another meeting in March.

But he made it clear that there will be no cuts in production.

“Cutting low cost production to subsidize higher cost supplies only delays an inevitable reckoning.”

Al-Naimi said during his speech that $100 oil had unleashed investments in what were previously uneconomic oil fields such as the Canadian oilsands.

The Saudi oil minister said that he would prefer it if oil didn’t continue to trade at the $20 level, but that he could live with it.

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