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Saudi oil minister says don't blame OPEC

"The fact of the matter is that strides in energy efficiency and a larger world economy have minimized the impact of oil costs on economic growth."

Saudi Arabian Oil Minister Ali al-Naimi

Saudi Arabian Oil Minister Ali al-Naimi delivered a tough message on Saturday to anyone who blames OPEC for high oil prices and the deterioration of the world economy -- lay off.

In a speech to an energy conference, Naimi sought to explode what he said were a number of myths about OPEC -- that the producer group dictates the price of oil, practices market extortion and has fuelled a global economic downturn with high energy prices.

OPEC, in control of just over a third of world production, could not set the price of oil, Naimi said.

"No one can claim to have a Midas touch," he said.

"OPEC aims at a preferred target price, and sets the direction to achieve it. While it establishes the price direction, markets through their own mechanism set the pace and scope of price movements."

And it was not true that OPEC efforts at supporting higher energy prices had caused the downturn in the world economy.

"This is simply not the case. The ups and downs of business cycles are a well established feature in every market economy and are multi-determined by factors that differ from country to country," the minister said.

Naimi was speaking after OPEC at a meeting this week decided to keep crude output levels unchanged, despite a slump in prices, and to meet again on Nov. 14.

The influential Saudi minister said on Friday that he expected OPEC to move swiftly to cut production before the meeting if prices stay low.

Naimi stressed in his speech that OPEC would vigorously defend its target price of US$25 for its basket of crudes, compared to near US$20 lately.

He said that oil prices in real terms were lower now than in the mid-1970s and early 1980s, and played a lesser role in the world economy.

"The fact of the matter is that strides in energy efficiency and a larger world economy have minimized the impact of oil costs on economic growth," he said.

Naimi reiterated OPEC's frequent complaint that petroleum consumers should not point the finger at OPEC because of the taxes their governments impose petroleum products.

"While crude oil prices have stablized around US$17.50 per barrel over the past 15 years, average taxes on a barrel of oil products in OECD countries have doubled over the same period," he said.
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