The world will never again see the price of oil at $100 per barrel, one of Saudi Arabias biggest investors said on Friday. Prince Alwaleed Bin Talal, chairman of Kingdom Holdings, spoke with CNBCs Squawk on the Street following the death of his uncle, King Abdullah. While he admitted that his country — which derives 90 percent of its budget from oil — is feeling the pain of the commoditys collapse, he predicted that Saudi Arabia would not be the first to blink. He said that a confluence of events have led to the fall in oils price, not—as some have suggested — a Saudi plot to harm Americas revitalized energy industry. I can assure you that Saudi Arabia is not using the oil price right now to impact the fracking industry in the United States, he said, adding that theres an oversupply and demand is not so high. The lack of balance between oils supply and demand means the road back to $60-$70 range will be not that easy, not that quick, the prince said, adding that markets may not even have found the bottom yet. I would not say that OPEC is dead, but I think the impact of OPEC as it was years ago is not the same for sure today. Given this weakness in oils price, Alwaleed admitted that the global strength of OPEC has weakened. I would not say that OPEC is dead, but I think the impact of OPEC as it was years ago is not the same for sure today, he said. He added that theres a game of who should cut production first between members of the oil cartel and non-OPEC nations. Saudi Arabia wont blink Eventually theres no doubt that some countries have to blink and reduce their production. ... I dont see Saudi Arabia or the OPEC countries blinking, he said. Alwaleed said he thought oils price could lead to political turmoil in countries like Venezuela that depend so much on the commodity and dont have a lot of extra wealth on the side for that rainy day—unlike Saudi Arabia and its neighbors. Weighing in on the global currency market, Alwaleed simply said Im a dollar man. As for equities, he said Kingdom Holdings will maintain its diversified strategy, but it is interested in some new companys like Chinas JD. Following Abdullahs death, Crown Prince Salman bin Abdulaziz became king of the worlds top oil exporter. Salman is a reformer at heart, Alwaleed said, and the country will continue down the same paths of financial, social and political reform as during Abdullahs reign. Reflecting on the political turmoil in neighboring Yemen, Alwaleed said the resignations of that countrys prime minister and president means clearly we have seen the hands of Iran infiltrating that country through its blatant and open support of the Houthis there. He called it an unfortunate situation as Yemens political vacuum could eventually be a seat of trouble.
Posted on: Fri, 23 Jan 2015 17:47:18 +0000
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