Gulf set to resist pressure to cut oil output

Comments ahead of today’s OPEC meeting, playing down calls for a cut in the cartel’s output target, suggest that the Gulf States aren’t too alarmed by the recent slide in oil prices. Indeed, Saudi Arabia’s Oil Minister, Ali al-Naimi, has explicitly said that there is no need for production cuts. This shouldn’t come as too much of a surprise. After all, oil prices would have to fall much further before the Gulf’s current account position swung from surplus to deficit. Even then, large FX reserves provide a comfortable buffer. That being said, with the world set to be awash with oil for the foreseeable future, a repeat of the boom in oil production seen over the past decade is highly unlikely.