Following this announcement, Brent crude hit its lowest since August 2010, falling below $72 a barrel, before settling at $72.82, 5% drop on the day. The US benchmark dropped $4.64 to $69.05 a barrel, although market business slowed by midday in thinning Thanksgiving holiday business.
“We don’t want to panic. I mean it,” said Mr el-Badri. “We want to see the market, how the market behaves, because the decline of the price does not reflect a fundamental change.” Crude oil prices have fallen 30% since June on sluggish global demand and rising production from the US.
The drop in the oil price has been causing concern for several members of the oil cartel, as most require a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel.
“Saudi Arabia and the Gulf states can resist for a while,” said Simon Wardell, energy expert at Global Insight. “They have significant financial assets that mean they can sustain a lower oil price. They can secure their budgets without a higher oil price.”
Source: International Media