The world is awash in oil. OPEC, in the past, would throttle production to bolster markets. Now, it has opened the spigots. Among the world’s top producers, Russia, Iraq, Canada and China are now pumping flat out, too. Take a look at some of the prominent people behind the boom.
Mohammad al-Sabban has made a career ensuring an eager market for Saudi Arabia’s oil.
One of his proudest achievements, he says, was watering down language in a planned communique from a Group of Eight energy-ministers’ meeting in Rome a decade ago. The draft advised the club of wealthy countries to cut its dependence on fossil fuel. At the time, oil markets were straining amid big supply disruptions and soaring demand. World capitals were calling for more Saudi oil, not less.
“These specific countries are telling us to increase our production capacity,” says Mr. Sabban, a long-time economist at the Saudi oil ministry. “And at the same time you are pushing your member countries to reduce dependency on our oil.”
In the late 1990s, and again amid the global economic crisis in 2008, Mr. Sabban was crucial in guiding Riyadh oil policy—advising big cuts in production to bolster prices.
This time, things are different, he says. Saudi Arabia shocked the oil world when it convinced its fellow OPEC members late last year to keep pumping, despite the steep oil-price drop. Instead of throttling back again, Saudi Arabia has opened the taps wider, to keep its customers amid new competition—chief among them, U.S. shale producers.
“The current Saudi policy is trying to protect its market share in the wake of increasing production of conventional and shale oil” outside the cartel, he says.
Mr. Sabban, 60 years old, stepped down from his official role as senior economic adviser at the oil ministry in 2013, but he continues to act as an adviser to Oil Minister Ali Al-Naimi. He now runs his own consulting group in Jeddah, and also write for local Saudi papers, often acting somewhat like a mouthpiece for the oil ministry, at a time when Mr. Naimi’s own words can roil markets.
Saudi thinking this time around is heavily influenced by another crash in prices—in the 1980s, just before Mr. Sabban started at the ministry. New crude output from Alaska and the North Sea had flooded markets. OPEC did what it had done in the past—it slashed output. Saudi Arabia, OPEC’s biggest producer, cut the sharpest, from more than 10 million barrels a day in 1980 to around 3.8 million in 1985.
But other OPEC members didn’t cut as much as they had promised, and non-OPEC supply grew sharply. Saudi Arabia lost customers. The kingdom’s share of global oil exports fell dramatically, from 21% in the early 1980s to less than 9% in 1985. The lesson has weighed heavily on today’s oil ministry cadre, including Messrs. Sabban and Naimi.
Amid today’s price fall, the kingdom has raised its crude output to a record high of 10.3 million barrels a day, as of March. Saudi Arabia and OPEC are “trying to minimize the loss in oil revenues by increasing production,” Mr. Sabban said.
— Summer Said
