Ali Naimi, the oil minister of Saudi Arabia, was in mischievous mood on Monday night, positing an oil price of $70 to $90 for the foreseeable future, and suggesting that oil consumers should be happy with such a settlement – because a price of more than $70 was needed to justify investments in renewable energy.
His remarks, which came in response to questions from the Financial Times at a dinner hosted by the Singapore International Energy Week, did not go down well with all sections of the audience – some were unhappy that the world’s biggest oil producer should suggest they be content with an oil price they felt was unnecessarily high.
Mr Naimi justified his $70 to $90 prediction, which he called a “comfortable zone” that should be welcomed by oil producers and consumers alike, by reference to renewable energy, which he suggested gave oil an “anchor” price. If the oil price were to fall below $70, then renewable energy would not be competitive, he said.
In other words, he seemed to be implying, governments and companies that have invested in renewable energy are at least partly responsible for setting a de facto minimum price for oil of $70 per barrel.
Nothing to do with those oil-producing countries wanting a price more than $70 and “less than $90”, and tailoring their production accordingly, then.
In fact, Mr Naimi said, the world’s oil market was already “a little bit oversupplied”, which he suggested proved that it was renewable energy that was keeping prices up.
By the way, that $90 – an upper limit of the range that he carefully dropped into the conversation – was $10 a barrel more than Mr Naimi had previously suggested was the range of the “comfort zone”. Oil markets took note, and prices nudged up: Nymex December West Texas Intermediate, a US benchmark, rose $1.88 to $83.31 a barrel just after the remarks.