Saudi Arabia prefers low oil prices rather losing its market share, experts says
By Fatma Babayeva
Saudi Arabia is ready to tolerate the low oil prices with the hope that it will be stabilized in the long term, Jason Tuvey, the economist at the British consulting company Capital Economics told Trend news agency on April 25.
Saudi Arabia is likely considering the oil market from the long-term perspectives, the economist said in his report.
Tuvey believes that Saudis probably fear that short-sighted deal on supporting oil prices will contribute to the development of the unconventional oil sources which in its turn, would undermine the country's long-term position in the market.
In addition, it can also reduce the demand for hydrocarbons and accelerate the process of eliminating the use of fossil fuels, the expert added.
Saudi Arabia has been the major obstacle on the way to reaching an agreement on cutting oil production for a long time, he said. The country preferred to deal with low oil prices rather than lose its market share.
The last meeting of the major oil producing countries in Qatari capital Doha on April 17 also ended without any agreement on freezing oil production at the level of January 2016.
Previously, Saudi Arabia said that it would not agree to freeze its oil output in the market if the other oil producers, especially Iran do so as well.
In its turn, Iran announced plans to increase oil production to the pre-sanctions levels.
The main reason of the failure was explained by many experts with the geo-political tensions between Saudis and Iran.
What’s more, Iran and Libya did not participate in the meeting.
According to the latest report of OPEC, oil production in Saudi Arabia remained unchanged at 10.2 million barrels per day in March.
Meanwhile, world oil prices showed a weak trend growth on April 21, while new highs for the year 2016 have been established a day before.
The cost of June futures of Brent crude exceeded $45 per barrel on April 25.
The main reason for the low prices is blamed to be a supply surplus which currently exists in the market.
Abdullah al-Badri, Secretary General of the OPEC, told the reporters during the International Oil Summit in Paris that he expects the world oil market to balance itself by the end of the current year or the beginning of 2017. He also showed overproduction as the only problem that is needed to be resolved in order to balance the market, RIA Novosti reported.
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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva
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