Ali al-Naimi's reappointment as Saudi Arabian Oil Minister may signal stable policy from OPEC's leading producer as members Iran and Venezuela antagonize the U.S., the world's largest consumer.
Al-Naimi, 71, will serve a fourth four-year term, the Saudi press agency said yesterday. Al-Naimi, dubbed the ``Greenspan of oil,'' helped smooth divisions among the Organization of Petroleum Exporting Countries, reviving its power as prices rose fivefold from 1998's record low, said Anthony Nunan, an oil trader at Mitsubishi Corp in Tokyo.
``He's been able to drive OPEC policy more clearly, he's a very intelligent man and with him OPEC has become more credible,'' said Simon Chen Bo, head of trading at China International Petroleum & Chemical Corp., a unit of Asia's largest refiner. Keeping al-Naimi was ``a very good decision.''
Saudi Arabia is among U.S. allies within OPEC, which produces 41 percent of the world's oil. Iran, the group's second-largest exporter, has defied U.S. demands to end nuclear research. Venezuelan President Hugo Chavez, who leads the U.S.'s third-largest supplier, has re-nationalized parts of the oil industry and called George W. Bush ``the devil.''
In 1998, Al-Naimi orchestrated an agreement between Saudi Arabia, Iran and Venezuela that set aside disputes on failures to stick to quotas and allowed OPEC to pursue a policy of cutting production to support prices. Two output cuts after oil plunged from last year's record of $78.40 a barrel has helped keep prices above $60.
``He's been very sensitive about cutting production quickly to support prices, but then increasing production when it looks like it will go high enough to start wrecking economies,'' said Nunan, assistant general manager for risk management at Mitsubishi, Japan's largest trading company, in Tokyo.
Doha, Abuja
Oil prices in New York fell 26 percent from the July 14 record to $56.82 on Oct. 20 when OPEC agreed to its first round of output cuts of 1.2 million barrels a day at a meeting in Doha. The group set a further 500,000 barrel a day cut when it met Dec. 14 in Abuja, Nigeria.
Al-Naimi stood by those cuts and refused to consider a third reduction even as prices continued to slide into January. Oil fell to an intraday price of $49.90 a barrel on Jan. 18, lowest since May 2005.
``There is actually no real need now,'' Al-Naimi said at an oil conference in New Delhi on Jan. 16. ``All the fundamentals are significantly better than they were in Doha and I believe in a very short time, it is going to improve.''
Oil has risen 24 percent from its January low. The 10 OPEC countries bound by the output quotas have removed about 1 million barrels a day from the market since October, according to Bloomberg estimates.
`Without Naimi'
``There was a risk that without Naimi we couldn't read the intentions of the Saudis,'' said Makoto Takeda, energy analyst at Bansei Securities Co. in Tokyo. ``The move will lead to greater stability of direction in the oil markets.''
Japan is OPEC's largest customer, importing about 3.6 million barrels a day from members of the group in January, according to government data.
The U.S. bought about 2.9 million barrels of OPEC oil a day in January, including 1 million barrels a day of Saudi Arabian crude, according to the Department of Energy. Bloomberg
