Saudi Arabia says oil is too expensive, may increase production to lower the price image

Saudi Arabia’s Oil minister, Ali al-Nouaimi, believes high oil price is not justified by the fundamentals of the market, which he appreciates as well balanced.

“Today’s high prices are simply not sustained by the fundamentals of the market. The market is well balanced as far as the supply is concerned, the demand and the level of stocks”, al-Nouaimi said in a press release. He added that Saudi Arabia, the world’s largest oil producer and exporter, has the interest of preserving the stability of the international oil market.

It’s no secret that the Kingdom of Saudi Arabia has always been a strong supporter of “fair price” for oil. The Saudis consider that a price ranging between $75 and $100 a barrel is a fair price, but not above of below that range. The explanation is simple: if oil is too expensive, alternative energies might develop faster and become more profitable, something that Saudi Arabia does not want.

The minister also said the country is willing to increase production to help lower the price of oil. While symbolic, the Saudi minister’s statement was reflected by the markets. A barrel of “light sweet crude” oil with delivery in October traded for $96.28 this morning in Asia, 14 cents less than a day before, while the Brent barrel lost 7 cents, being traded for $114.32.