It's an understated sentence with huge implications: He expects the global oil market "to stabilize itself eventually."
Those were the words of Saudi Arabia's oil minister Ali al-Naimi on Wednesday, Reuters reported, as the 12 members of OPEC geared up for a Thursday meeting to discuss the precipitous decline in oil prices.
Al-Naimi's sentiment could mean cheap oil for the world and tough times for countries including Venezuela and Russia as Saudi Arabia, one of the world's three biggest oil-producers, refuses to cut production as prices fall.
Saudi oil minister Ali al-Naimi attends the Gulf Cooperation Council (GCC) oil ministers meeting in Kuwait city on September 11, 2014. Al-Naimi said the global oil market would "stabilize itself eventually" in comments Wednesday, perhaps signaling ahead of OPEC's Thursday meeting that Saudi Arabia would not collude with other oil producers to cut production and boost oil prices. (AFP photo/ Yasser al-Zayyat)
Oil prices have declined precipitously since the summer in the face of increased global (and especially U.S.) production and a dip in global demand.
For more than a month, Saudi Arabian officials have been saying that they are OK with falling oil prices, leading many to speculate that the oil-rich nation is planning to ride out the lower prices, watch high-price-dependent competitors crumble and then scoop up additional market share in the aftermath.
One of those competitors, Russia, signaled on Tuesday that it would not cut production, despite the fact that Russian government budget projections depend on oil prices around $100 per barrel — oil prices have slumped below $80 per barrel recently.
A Saudi oil refinery. (Image via Chris Evans/flickr)
As TheBlaze has previously reported, falling oil prices could wind up hurting the very thing that's help make oil cheap: the U.S. shale oil boom.
Extracting oil from shale is a more expensive process than many other forms of oil extraction, meaning low oil prices could render shale oil unprofitable.
As the U.S., Russia and Saudi Arabia — the world's three biggest producers of oil — appear to be pumping out gas full-throttle, smaller OPEC members Venezuela and Iraq have called for cuts in oil production.
It's unlikely that call will be heeded by all during OPEC's meeting Thursday.
Iranian Oil Minister Bijan Zangeneh said some OPEC nations were preparing to fight over market share during the price dip, though he said Iran wouldn't be participating in that fray and called for "solidarity" among OPEC members, Reuters reported.
"The most important thing for all of us is the unity and solidarity of OPEC, and in this situation I believe we need to have the contribution of non-OPEC producers for managing the market," Zangeneh told reporters. "Some OPEC members believe that this is the time where we need to defend market share ... All the experts in the market believe we have oversupply in the market and next year we will have more oversupply."
Of course, Iran is in a safe position to call for unity: As Reuters noted, Iran inadvertently provided the hard-hit members of OPEC with some relief as talks over Iran's nuclear program stalled out earlier this week, meaning Iranian oil will still be subject to Western sanctions and can't flood the global market.
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