Prince Alwaleed bin Talal, Saudi business magnate, investor and the member of the Saudi royal family says oil will never be at $100/ barrel.
In an interview with Maria Bartiromo for USA TODAY he enlists his reasons for dropping the oil prices. The prime reason for slashing down the prices is holding onto the market share of oil.
He also talks about the Charlie Hebdo killings , and the growing economies of China and India.
Few of the question-answer from the interview
Q: So this is about not losing market share?
A: Yes. Although I am in full disagreement with the Saudi government, and the minister of oil, and the minister of finance on most aspects, on this particular incident I agree with the Saudi government of keeping production where it is.
Q: What is moving prices? Is this a supply or a demand story? Some say there’s too much oil in the world, and that is pressuring prices. But others say the global economy is slow, so it’s weak demand.
A: It is both. We have an oversupply. Iraq right now is producing very much. Even in Libya, where they have civil war, they are still producing. The U.S. is now producing shale oil and gas. So, there’s oversupply in the market. But also demand is weak. We all know Japan is hovering around 0% growth. China said that they’ll grow 6% or 7%. India’s growth has been cut in half. Germany acknowledged just two months ago they will cut the growth potential from 2% to 1%. There’s less demand, and there’s oversupply. And both are recipes for a crash in oil. And that’s what happened. It’s a no-brainer.
Q: Will prices continue to fall?
A: If supply stays where it is, and demand remains weak, you better believe it is gonna go down more. But if some supply is taken off the market, and there’s some growth in demand, prices may go up. But 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.