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Oman criticises Saudi Arabia for keeping oil prices low

Oman's oil minister said that Saudi Arabia did not have a 'God-given right' to control oil prices
Oman's Oil and Natural Gas Minister Mohammed bin Hamad al-Rumhi speaks to the press during the 135th ordinary meeting of the Organisation of Petroleum Exporting Countries (AFP)

Oman's oil minister, Mohammed bin Hamad Al Rumhy, has sharply criticised the world's largest oil exporter, Saudi Arabia, for not cutting its production amid a slump in oil prices and warned some OPEC countries may soon act unilaterally and cut output.

Speaking at a panel discussion at the Energy Security Conference in Berlin on Thursday, Al Rumhy said: "Saudis, they do not have a God-given right to decide what others are doing in OPEC.

"I think, one of these days, we are going to see OPEC countries like Angola, Nigeria, Gabon, Venezuela, Iran and maybe Iraq, going unilaterally without the Saudis."

The price of Brent crude oil fell from $115 per barrel in June 2014 to below $46 per barrel in January 2015, its lowest level in almost six years due to oversupply and low global demand.

Saudi Arabia has repeatedly refused to make production cuts to trim oversupply in the market.

Al Rumhy said the current situation was not sustainable for oil-export dependent economies.

Criticising Saudi Arabia, he said: "You cannot just dump barrels in the market. Where will it go?

"Most of the strategic reserves of many countries, and we are following this, are almost full. So you cannot keep on producing and increasing production because you have capacity."

He said that countries which were worse hit by the oil price slump may act soon.

“We cannot just wait for good weather, for the sun to shine. We are going to do something about it. And my bet is that we will do something about it," he added.

Oman has been in discussion with Iran - Saudi Arabia's main rival in what have been seen as proxy conflicts in neighbouring Yemen as well as in Syria - to plan the route for a natural gas pipeline to transport Iranian fuel to Oman.

Once a route is decided, the two countries will seek to determine a price for the gas and the construction process.

“We think this gas will see daylight,” said Al Rumhy, in April. “The issue of the pricing of the gas, we agreed that we will leave to the end of the project.”

Iran's economy has been hit by falling oil prices, leading some to speculate that Saudi Arabia has been punishing the Islamic Republic by keeping oil prices low.

However, this has led to the risk of diplomatic fallout with other OPEC producers, which the kingdom overwhelmingly dominates as the largest producer.

"The question is why the Saudis would risk the goodwill of other OPEC members, simultaneously emasculating the organisation and undercutting their ability to use it in the future to serve their interests," wrote Michael Stephens of the Royal United Services Institute.

"It is a game of high-stakes poker and in the long run will cause the Saudis some harm, but that is not where their immediate thoughts lie."

According to Oman's oil and gas ministry, the Sultanate pumped 943,000 barrels a day of crude and condensate last year and is looking to reach 980,000 this year.

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