Saudi to stick with oil output despite low prices

Saudi Arabia’s oil minister said on Wednesday his country won’t change policy and will continue with the current output level that has kept prices at historic lows.

The kingdom – a member of Organisation of Petroleum Exporting Countries (OPEC) – has seen a sharp drop in revenues as oil prices have plummeted more than 60 percent since mid-2014 to below $40 a barrel.

“It is a reliable policy and we won’t change it,” Oil Minister Ali al-Naimi was quoted as saying by the Wall Street Journal, two days after the world’s largest oil exporter posted a record budget deficit of $98 billion.

“We will satisfy the demand of our customers. We no longer limit production. If there is demand, we will respond. We have the capacity to respond to demand,” he said.

Saudi Arabia, along with Iraq, has continued to jack up oil production despite low prices. It pumped 10.1 million barrels a day in November, according to OPEC – the 12-nation cartel that produces one-third of the world’s oil.

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Naimi’s remarks came after the kingdom on Monday announced cuts in subsidies on fuel and utility services, with petrol prices shooting up by as much as 40 percent.

With oil prices expected to remain low, Saudi authorities also projected a shortfall of $87bn in the 2016 budget.

The kingdom withdrew more than $80bn this year from its reserves, which stood at $732bn at the end of 2014, and issued bonds worth about $20bn.

People in Saudi Arabia came out on social media to express their views on the budget and subsidy cuts.

“Rich people can overcome the rises but the poor depend on the government,” Twitter user Fahad al-Owain wrote.

Others said it was time for Saudis to tighten their belts.

“I believe this budget will teach us the art of rationalising consumption,” Twitter user Udai al-Dhaheri wrote.