KEY POINTS:
ABU DHABI - Opec will cut output further at its December meeting if the oil market remains imbalanced, Saudi Arabian Oil Minister Ali al-Naimi said today.
"We will look at the numbers, we will assess the market, if it is out of balance we will take some more
action," Naimi told reporters.
Opec meets again on December 14 in Abuja, Nigeria and ministers have said they are ready to cut output back further if needed after agreeing a 1.2 million barrels per day cut from November at their last meeting.
"The market is not in balance," Naimi said, when asked for his assessment of the current supply/demand picture. "The inventories are very high."
Naimi was returning to the Gulf from Islamabad, where he told the 2nd World Islamic Economic Forum that low oil prices discourage producers' investment in new capacity and, if they sink too far, promote oil market volatility.
"The reality is very low oil prices are not sustainable. In fact they invariably lead to volatility and subsequently higher prices..." Naimi said in a speech.
"Prices must be high enough to offer an adequate return to producers without hurting consumers," he added.
Oil prices have slid 25 per cent since a July peak partly because of high fuel stocks in top consumer the United States, but pushed back over US$60 ($90.95) a barrel on Monday.
"We have seen that there us a strong negative correlation between low oil prices and the ability of producers to continue supplying energy to growing economies. The low oil prices of the 1980s and 1990s offered little incentive to invest in the energy industry," Naimi told the conference.
"Some individuals also mistakenly believe that economic growth is inversely related to the price of oil or to the amount of oil a country imports. Recent experience has shown this is not true," Naimi added.
"Neither high prices nor substantial energy import dependence has been a major impediment for ... (consumer countries') economies," he said.
"Some say that the preeminent goal of energy policy should be to keep oil prices as cheap as possible in the mistaken belief that low oil prices are a precondition for stability and sustainable economic growth."
"Experience taught us that in fact, the opposite is true."
Naimi said he saw great opportunities for investors to research, develop and commercialise new sources of energy which can help supplement conventional energy resources.
"Conventional energy resources -- oil, gas and coal -- are plentiful and sufficient to meet world energy needs for the foreseeable future," he said.
But he added: "The world must find, develop and produce large new quantities of energy on a scale unprecedented in the history of mankind. I believe it can and will be done but it will not be easy."
- REUTERS
