“It is not in the interest of Opec producers to cut their production, whatever the price is,” he told the Middle East Economic Survey.Like Warren Mosler states below:
“Whether it goes down to $20, $40, $50, $60, it is irrelevant.”
In the MEES interview, Mr Naimi said Saudi Arabia and other Gulf oil producers would be able to withstand a long period of low crude prices, largely because their production costs were so low — at only about $4-$5 a barrel.
But he said the pain will be much greater for other oil regions, such as offshore Brazil, west Africa and the Arctic, whose costs are much higher.
“So sooner or later, however much they hold out, in the end, their financial affairs will limit their production,” he said.
“We want to tell the world that high efficiency producing countries are the ones that deserve market share,” said Mr Naimi added. “If the price falls, it falls . . . Others will be harmed greatly before we feel any pain.”
The bluntness of Mr Naimi’s message took even seasoned Opec observers by surprise. “I’m more bearish than most people looking at the oil price, but even I am stunned how aggressive his comments are about this radical departure from policy,” said Yasser Elguindi of Medley Global Advisors.
The Saudis never ‘cut production’. They just set price and let the world buy what it wants at their price. No one seems to know that. As no one ever asks if they are going to raise price.