Saudi Oil Minister Ali Naifitold the producers yesterday that the country would not cut production to raise prices. In a blount statement, he told the group that market forces would determine the price per barrel. He also stated that expensive recovery efforts related to deep water drilling, tar sands recovery, and shale extraction all worked to destabilize the market. These expensive extraction methods no longer have a place in the market that is coping with energy alternatives to oil and gas, ie. solar power and natural gas.
The recent re-entry of Iran into the global marketplace put further pressure on prices. Iran announced that the country would double production from recent past amounts. Saudi Arabia is one of a few countries that can make money at $20/barrel. Brazil, Venezuela, and Algeria cannot market profitable oil at that price. While large producer Russya can make money at this price, the dollar amount they need to stabilize the economy is much higher, closer to $60/barrel.
It's nice to see the Saudis getting the rap they deserve. The modern "Kingdom" of religious fanatics is unsuited to any respectable position in international politics. Until such time as a reform movement turns this monolith around, Saudi Arabia will be treated as the leper it is.
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