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Saudi cabinet says oil policy purely economic in motive

Published 01/12/2014, 14:48
© Reuters. A gas flame is seen in the desert near the Khurais oilfield
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KHOBAR, Saudi Arabia (Reuters) - Saudi Arabia said on Monday that its oil policy was based on economic principles, as speculation continued to swirl after last week's OPEC meeting of political motives aimed at other producers.

"The cabinet stressed that the kingdom's oil policy is emanating from economic fundamentals, to achieve the economic interests of the kingdom on the short and long term, and the interests of producers and consumers," the Saudi cabinet said in a statement on Monday according to state news agency SPA.

Riyadh, along with its Gulf OPEC allies, resisted any OPEC output cut at the group's meeting, to maintain the exporting group market share in a battle with non-OPEC and North American producers.

Brent crude oil fell on Monday to a five-year low below $68 as investors looked for a price floor after the OPEC decision not to cut production. A boom in shale oil production and weaker growth in China and Europe have sent prices down by over a third since June.

Despite the steep fall since last week, the Saudi cabinet "expressed satisfaction" with the OPEC decision, which it said "reflects the cohesion of the organisation and unity, and foresight, which is something that is of particular importance for the kingdom," SPA reported.

On Sunday, Iran's oil minister was cited as saying that OPEC's decision is not beneficial to all members, but Iran has refrained from protesting to maintain group solidarity.

Gulf oil producers are ready to ride out the weak oil prices that have hurt the likes of Venezuela and Iran - OPEC members which face big budget pressures, but cannot afford to make output cuts themselves.

© Reuters. A gas flame is seen in the desert near the Khurais oilfield

The Saudi cabinet also called for cooperation against market speculators and said that "cooperation of the producers from within and outside the organisation is a shared responsibility to achieve stability."

(Reporting by Reem Shamseddine; writing by Rania El Gamal; editing by William Hardy)

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