Kemp: Oil Prices and Saudi Diplomacy



Kemp: Oil Prices and Saudi Diplomacy
Saudi Arabia sets oil market policy purely on an economic basis, no less and no more, the kingdom's oil minister reiterated in a broad-ranging interview with the newspaper Al-Hayat.

John Kemp is a Reuters market analyst. The views expressed are his own

Reuters

LONDON, Dec 22 (Reuters) - Saudi Arabia sets oil market policy purely on an economic basis, no less and no more, the kingdom's oil minister reiterated in a broad-ranging interview with the newspaper Al-Hayat.

Ali al-Naimi rejected "conspiracy theories" that Saudi Arabia was using oil as a diplomatic weapon against Iran, Russia or any other country, calling such beliefs a misunderstanding, tendentious and a fantasy without foundation.

Naimi was countering widespread suggestions in the Western media and think tanks that the kingdom had deliberately caused the price of oil to collapse in order to weaken its adversaries in Syria, Iraq and Iran.

But is there really any evidence to suggest the kingdom's top policymakers have deliberately sought lower oil prices? Or has Saudi Arabia simply responded to events beyond its control by selecting the most sensible strategy from a range of unappealing options?

We will never know the answer for certain. Saudi oil policy is set by the minister alone in consultation with the king and a tiny group of senior princes. Access to those discussions is severely limited. Those who know tend not to talk, and those who talk tend not to know.

Nonetheless, there are good reasons to doubt the kingdom is wielding the oil weapon as part of some grand "geopolitical strategy" either on its own or in conjunction with the United States.

In his newspaper interview, Naimi blamed falling oil prices on the global economic slowdown, rising production from outside OPEC, the spread of misinformation, and speculators.


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