A bracing walk through Vienna with Mr Opec

03 June 2009

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Tom Bower talks to Ali al-Naimi, the Saudi oil minister, at Opec’s meeting and is struck by how this master manipulator escapes censure in the great oil blame game

Speculators are back in favour, especially the fund managers bidding up the price of oil. Cursed last year for tipping the world into recession, the same traders are now praised by some for once again betting on rising prices. Last year’s sinners are now cast as the Good Samaritans.

The conductor of that topsy-turvy world is Ali al-Naimi, the Saudi oil minister. Choosing his words carefully as he walked through the centre of Vienna towards last week’s Opec meeting, the 75-year-old geologist smiled enigmatically about the speculators: ‘I’m not concerned.’ The opposite is the truth. The 5ft tall former shepherd boy turned Master of the Universe modestly claims praise for orchestrating this defiance of economic laws. In the midst of the recession, while the world’s demand for crude oil has fallen to a 16-year low and there is more unsold oil sloshing around in storage than ever before, prices have doubled in eight months. Tantalisingly, al-Naimi, alias ‘Mr Opec’, drew the curtains on a mad world in Vienna.

Eleven nations producing 40 per cent of the world’s crude were plotting how to restore the fortunes they previously enjoyed as prices rose from $30 in 2003 towards a record $147 last July. Hundreds of billions of dollars had flowed from the industrialised world to the oil producers, transforming nations and their inhabitants’ lives. Amid months of hectic trading, with authoritative predictions that the price was remorselessly heading to $200, most producers including al-Naimi believed the good times would never end. Wise oil men know that the cycle never changes. ‘No one can permanently fix the market,’ al-Naimi had been told, but he ignored the truism.

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PJ Bliss

June 8th, 2009 6:49am Report this comment

It is hard to find such honesty about OPEC's determination to push up the oil price. The oil price/exploration nexus is hard to justify. The price of natural gas is at a historic low but huge funds are pouring into development of costly gas shales.

As to the glut of oil, Shell, I believe it was, tried to sell a tanker full of crude last week and found no buyers. With futures dealers taking delivery and storing the oil in tankers (contango) and total storage capacity full to overflowing price will become more difficult to hold up in a fairly short time.

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