Analysts say downward trend will continue unless major producers, especially Gulf states, move to cut output.
Saudi Arabia’s OPEC governor Mohammed al-Madi said his country has no political motives in its oil policy, rejecting criticism over Riyadh’s decision to let oil prices slide.
Some producers say Riyadh declines to support the oil prices with an OPEC production cut in order to hinder other producers, such as Iran, a diplomatic rival of Saudi Arabia.
“There isn’t any political dimension in what we do at the oil ministry – our vision is commercial and economic,” Madi told an energy conference in Riyadh on Sunday, according to the Reuters news agency.
“We didn’t mean to hurt anybody, our vision is simply the following: the producers which have low costs have to have the priority to produce, but those who have high costs have to wait for their turn to produce,” he said.
“We are not against anybody or against the [production of US shale oil] … On the contrary we welcome it, as it balances the market in the long run.”
Madi said that the price drop was because of fundamental supply and demand factors, not any non-economic policies.
“Was OPEC able to control prices? The answer is, if OPEC could have controlled the prices it would have done so, but it is not in the interest of OPEC to control the prices,” the OPEC governor said.
“It is OPEC’s interest to achieve balance in the market. The price is decided by the market, and the market is subject to supply and demand.”
Madi also said that he believed it would be difficult for oil to reach a price range of $100-120 per barrel again. Brent crude is currently around $55 per barrel.
“$100-120 – I think it’s difficult to reach 120 another time…We understand that all countries need higher incomes…We want higher incomes, but we want higher incomes for us and future generations,” Madi added.