Saudi king says oil at $75 per barrel a fair price

29 November 2008

King Abdullah of Saudi Arabia, the largest oil producing nation in the world, has said that the fair price for oil is $75 a barrel.

In an interview to Kuwait's Al-seyassah newspaper, King Abdullah commented that $75 would be a fair price, around the same time when ministers of the Organisation of the Petroleum Exporting Countries (OPEC) were scheduled to meet in the Egyptian capital, Cairo, to decide whether to implement production cuts to bolster falling prices of crude oil. King Abdullah did not say anything more about why $75 would be a fair price.

Oil prices have been fluctuating between $50 and $55 this past week, having dropped over 60 per cent since their record high of $147.27 in mid-July.

The comment on the price of oil by Saudi Arabia's King is the first time in years that there has been some kind of formal target price cited by the oil producing country. Saudi oil mnister Ali al-Naimi also said that oil prices would have to stabilise around $75 to keep the more expensive new projects on track.

Oil minister Naimi was quoted in reports as saying that there was ''good logic'' for $75 a barrel of oil, as he believed that $75 is the price for the marginal producer. He said that if the world needed supply from all sources, prices need to be protected, and therefore $75 is a fair price. He was speaking ahead of the OPEC meeting in Cairo.

Media reports suggested that the comments were welcomed as a relief to concerns that OPEC would seek to push crude prices back towards $100 per barrel, given the global recession. Benchmark US crude had closed just over $54 per barrel on Friday.