With no end in sight as oil slid to its lowest level in almost five years, Saudi Oil Minister Ali Al-Naimi, said Friday the current price levels “are wreaking havoc on the industry and are threatening current and planned investments.” Speaking in London during a meeting of 27 oil producing and consuming nations convened in London and attended by figures including British Prime Minister Gordon Brown and OPEC chief Abdalla Salem El-Badri, Al-Naimi suggested that production levels alone did not drive oil prices. Prices fell despite pledges by the Organization of the Petroleum Exporting Countries this week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group. The Kingdom would be pumping less oil in January according to its new output target, Al-Naimi said. Brown in his opening address sought action to reduce huge swings in oil prices that he said had damaged the world economy. “We will need a new partnership between oil-producing and oil-consuming countries,” Brown said. “As with the global financial crisis, this global crisis in our energy markets cannot be solved by one nation or one continent alone.” Brown had originally called the meeting in June when oil prices were heading toward an all-time peak of more than $147 a barrel. Prices have dropped more than $100 since then as the credit crisis and recession have shrunk demand for fuel. Brown said the dramatic spike in oil prices had “an enormous and damaging impact on the global economy” and cited a recent study which estimated “the high oil price took around $150 billion out of world economic output this year alone.” “But today with prices falling, it is clear that our most pressing challenge now and for the future is oil price volatility. Such volatility is in no one's interest. Wild fluctuations in oil prices harm nations all around the world.” Fair price Naimi, reiterated that $75 a barrel was a “fair and reasonable” price for oil. “It is the price that marginal producers need to maintain investments sufficient to provide adequate supplies for future oil consumption needs. When oil is priced lower, such as it is now, there will be less investment and less future supply.” He said stable oil prices were essential to ensure long-term investment in the energy industry. “I continue to believe that non-fundamental factors continue to impact oil prices, both upwards and downwards,” Al-Naimi said, adding “non-fundamental factors” such as rapid and substantial financial deleveraging had contributed to the sharp price falls of recent months. Nobuo Tanaka, executive director of the International Energy Agency, said the need for dialogue between oil producers and consumers remained even after oil prices had fallen sharply. “The price decline ... has provided some welcome respite, a breathing space in these troubled economic times,” said Tanaka. “But the need for dialogue remains just as strong.”
