Shocking: Saudi Arabia thinks oil prices at $30 per barrel are “irrational.”
According to a report in The Financial Times, Khalid al-Falih, chairman of the state-owned oil company Saudi Aramco, said at the World Economic Forum in Davos that he expects a recovery in prices this year.
“The market has overshot on the low side and it is inevitable that it will start turning up,” Falih said.
Saudi Arabia, however, is not prepared to cut production to bring prices back to something that it, apparently, thinks would make more sense.
In fact OPEC — the 13-member oil cartel Saudi Arabia effectively leads — is in disagreement over how to use production limits to possibly push oil prices higher. Gone are the days when Saudi Arabia and other OPEC states would simply turn off the tap and watch oil prices go up.
Though with oil near 13-year lows, that’s something several OPEC members are willing to try.
A separate Bloomberg report also notes that that Nigeria’s oil minister said at Davos that OPEC should meet soon to revise the decision it made at its December summit to not have a production ceiling.
Sources also told Bloomberg that Venezuela has requested an emergency meeting before the next one scheduled in June as the pain from low oil prices becomes more unbearable for the South American nation.
But reports indicate that Saudi Arabia is only willing to cut production if it can get other non-OPEC producers to do the same (read: Russia).
Essentially, Saudi Arabia does not want to be the first oil market giant to “blink” in this showdown between producers who want higher oil prices but are fearful of losing market share on any downturns in production.
On Thursday, Brent and West Texas Intermediate crude oil — the international and US benchmarks — jumped about 4% after tanking to new lows on Wednesday.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.