Ali al-Naimi, the Saudi Arabian oil minister, said Sunday that the kingdom had sliced its oil output by some 800,000 barrels per day in response to what he said was an oversupply, despite soaring prices.
This indicated that OPEC will not move to control the price, which has outpaced weak demand. That price is bolstering the Saudi budget currently; in an effort to prevent uprisings similar to others that have occurred throughout the Middle East/North Africa (MENA) region, the Saudi government has promised $93 billion in various benefits to its citizens. A fall in oil prices would have serious impact on its budget as a result.
Reuters reported that al-Naimi gave the news in an indication that OPEC would take no action to control the price of oil. His comments about oversupply were more or less repeated by oil ministers from Kuwait and the United Arab Emirates (UAE), who also said that oil prices were out of OPEC's hands. The group does not plan to meet again till June, and have ruled out the possibility of an emergency meeting.
Naimi was quoted in the report saying, "The market is overbalanced ... Our production in February was 9.125 million barrels per day, in March it was 8.292 million barrels per day. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied."
There is a possibility that Kuwait may also have reduced its production, although that is not known for sure. Its March output is estimated by analysts and oil traders at 2.42 million barrels per day.
Nobuo Tanaka, head of the International Energy Agency, which represents oil importers, did not come out and say that OPEC should raise the supply, but he did suggest that the cartel might want to be more flexible in its approach. He was quoted saying, "The market is getting tighter and if it is tighter the price may go up, which may have a negative impact to economic growth."