Oil hits new 5.5-year lows as Saudi Arabia defends stance

Brent North Sea crude for delivery in February dived $2.01 to $51.10 per barrel, the lowest level since early May 2009


Afp January 06, 2015
Saudi Arabia's Crown Prince Salman, in a speech on behalf of ailing King Abdullah Tuesday, said weak growth was to blame for the price fall, which has sliced deeply into the income of the world's largest exporter. STOCK IMAGE

NEW YORK: Oil prices tumbled Tuesday to fresh 5.5-year lows as Saudi Arabia blamed weak global economic growth and said it will stick to its guns-on-production policy.

US benchmark West Texas Intermediate for delivery in February sank $2.11 to $47.93 a barrel, a low last witnessed in late April 2009.

Brent North Sea crude for delivery in February dived $2.01 to $51.10 per barrel, the lowest level since early May 2009.

"The market is still worried that there are no signs that the supply glut will start falling," Nordea Markets analyst Thina Margrethe Saltvedt told AFP.

James Williams of WTRG said the weakness in the market could take prices below $40 a barrel.

"Basically, there are continuing concerns about OPEC not cutting back, particularly Saudi Arabia, and US production continuing to grow," he said.

Saudi Arabia's Crown Prince Salman, in a speech on behalf of ailing King Abdullah Tuesday, said weak growth was to blame for the price fall, which has sliced deeply into the income of the world's largest exporter.

"This development is not new in the oil market, and the kingdom has in the past dealt with it firmly and wisely," he said, adding that Saudi Arabia will maintain its "same approach" towards the market.

That appeared to confirm Riyadh's determination to defend its market share rather than reduce output, even if that pushes prices lower.

On Monday Saudi Arabia reportedly cut its European and US export prices in order to maintain market share.

COMMENTS (6)

woody | 7 years ago | Reply

@Rex Minor:

The house of Saud does not dance to the tunes of the USA but on the contrary, it is the white house which considers SAUDI interests in their policies.

May have been somewhat true in the past ... but definitely not true these days. If your statement is true then explain why the USA has defied Saudi wishes on Syria and Iran .. both are obvious examples that indicate that the USA is now making strategic and tactical decisions without Saudi input.

Asad Khan | 7 years ago | Reply

@vaqas: Aye Dude, I was not replying against you I was just adding in concurrence to what you have posted. Although my intent was to induce readers to look deeper into the things which is just being repeated in popular media over & over again.

Technically there is abundance of oil (energy) available on Earth. The hassle is, the ones who are sitting on those locations either does not have money / capacity / will or they does not want to tap it just for the purpose of geopolitics.

Due to their decisions (either to tap or not), we billions will bear the consequences of their decisions either positively or negatively.

In my opinion just like UN have mandated drinking water as an essential human right so should it add the clean energy as well in human right index.

We the billions are tired now for this amalgamation of geoeconmics + geopoltics thingy, we want peace of mind.

regards,

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