OPEC cannot cut oil production alone to stabilize the market, according to the former Saudi Arabian oil minister who masterminded the pump-at-will policy the group adopted two years ago.
“I don’t think OPEC by itself should cut,” Ali Al-Naimi, who was one of the world's most influential oil officials until he retired in May after two decades, told a Chatham House event in London, Bloomberg reported.
While Al-Naimi stood by the November 2014 decision when Saudi Arabia led OPEC to keep pumping, triggering a price collapse, he said the situation has changed somewhat as other producers, including Russia, are talking to the group about coordinated cuts.
“Other producers now are thinking about cooperating,” said Al-Naimi, 81, who was in the UK promoting his memoir. “That’s great. If they cooperate and deliver, it’s good.”
OPEC, which pumps about 40% of the world’s oil, meets on Nov. 30 in Vienna to try to implement its first cuts in eight years after agreeing to trim output in Algiers at the end of September.
Two years ago Saudi Arabia faced an impasse, Al-Naimi said, commenting on OPEC’s decision to pump without limits.
“We tried hard to get everybody to cooperate,” said Al-Naimi. “They didn’t. Then, I remember asking every OPEC minister: “Will you cut? will you cut? will you cut?” All the answers were no,” he said, explaining that then Saudi Arabia, the world’s largest oil exporter, refused to go it alone. “I think that was and still is the right decision,” he said.
Saudi Arabia and other members of the Organization of Petroleum Exporting Countries boosted production, sending oil prices to a 12-year low of below $30 a barrel in January, from more than $100 in mid-2014.
While the situation has changed, Al-Naimi’s memoir -- “Out of the Desert: My Journey from Nomadic Bedouin to the Heart of Global Oil” -- offers a cautionary tale of the potential contribution from non-OPEC producers, particularly Russia.
Al-Naimi writes in the book that one of his aides asked him in November 2014 about the chance of leading non-OPEC countries Russia, Mexico, Kazakhstan and Norway cutting oil production.
“I held up my right hand and made the sign for zero," he writes.