Saudi Prince Al-Waleed bin Talal said that the days of $100 per barrel oil are over, though he noted prices could rise from their current levels.
The billionaire businessman told USA Today that the high prices markets endured for several years were “artificial,” and that a return to those levels isn’t likely.
“I’m sure we’re never going to see $100 anymore. I said a year ago, the price of oil above $100 is artificial. It’s not correct,” he said.
Brent crude, an international benchmark, opened at $50.11 per barrel Monday. That’s less than half of what it fetched in June 2014.
The sharp decline in oil prices is a result of surging United States shale energy production, a decision to keep supplies in Organization of Petroleum Exporting Countries member states flowing and sagging global demand.
The OPEC decision was made by Saudi Arabia, the world’s top oil producer, which wanted to preserve its market share against U.S. competitors. Normally, OPEC had cut production to buoy prices, but now the House of Saud is trying to test how U.S. firms in higher-cost shale energy regions fare. Many American firms are beginning to feel the pinch.
Not everyone in OPEC was on board with the decision. Venezuela and Iran are teaming up to lobby other OPEC member nations into taking action to boost prices. Their government revenues are dependent on high oil prices, and they don’t have anywhere close to the hundreds of billions in foreign exchange reserves Saudi Arabia lays claim to.
But bin Talal, a member of the Saudi royal family, said he supported the decision to let prices fall.
“[T]he decision to not reduce production was prudent, smart and shrewd,” he said. “Because had Saudi Arabia cut its production by 1 or 2 million barrels, that 1 or 2 million would have been produced by others. Which means Saudi Arabia would have had two negatives, less oil produced, and lower prices.”
