Saudi Arabia, OPEC’s biggest oil producer, believes oil prices could stabilize at around $60 a barrel, a level it and other Gulf producers believe they could withstand, people familiar with the situation said.
The shift in Saudi thinking suggests the de facto leader of the Organization of the Petroleum Exporting Countries won’t push for supply cuts in the near-term, even if oil prices fall farther. Brent crude was trading at just over $70 a barrel Wednesday.
The shift also shows how quickly OPEC members are having to adapt to changes in the oil market caused by a surge in supply from the U.S. shale revolution and slowing global demand growth. As recently as early November, OPEC officials were citing $70 a barrel as the level at which there would be “panic” within its ranks.
The Gulf producers “don’t have a price target and if prices drop further below $60, it won’t be for a long time,” an official said.
Before last week’s OPEC meeting in Vienna, the Saudis had been considering a Venezuelan proposal to cut the producer group’s oil output sharply. The possible deal fell apart when Russia, a major oil producer that is not a member of OPEC, refused to participate in a general supply cut, people familiar with the situation said.
