Ali Naimi is not fond of extremes. The Saudi Arabian petroleum minister is so worried by high oil prices — Brent crude commands about $123 a barrel — he felt compelled to pen an Op-Ed in today’s Financial Times. The last time he took to the newspapers, according to a search of Factiva, was back in February 2009, following oil’s crash from triple digits to less than $40 amid the financial crisis.
Mr. Naimi’s message Thursday was simple: very high oil prices are bad for the global economy, which is ultimately bad for oil demand, and Saudi Arabia will act to bring them down. He singles out Europe in particular as an example of a weak economy being undermined further by high energy costs, a point echoed in the OECD’s latest assessment of economic prospects, also released Thursday.
Oil accounts for 45% of Saudi Arabia’s economy and the vast majority of its (swelling) public budget. Its rulers know that geopolitical risks centered on Iran are keeping prices high. That is encouraging consuming countries to look for alternative energy sources, reduce energy consumption, and even consider releasing barrels from strategic reserves.
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