Saudi Energy Minister Khalid al-Falih told Russia's TASS news agency that it does not plan to repeat its 1973 oil embargo, as the country's relationship to the West remains tense following the death of Saudi journalist Jamal Khashoggi.
When asked by TASS if an embargo could happen, al-Falih said: "there is no intention." Saudi Arabia last used oil as a direct weapon in 1973, when it led other members of the Organisation of Arab Petroleum Exporting Countries to place an oil embargo on supporters of Israel during its war with Egypt. This led to a rise in oil prices.
“This incident will pass," al-Falih reportedly said. "But Saudi Arabia is a very responsible country, for decades we used our oil policy as a responsible economic tool and isolated it from politics."
“My role as the energy minister is to implement my government’s constructive and responsible role and stabilizing the world’s energy markets accordingly, contributing to global economic development,” al-Falih said.
Concerns are not solely political; higher oil prices would be detrimental in the long-term.
“If oil prices will go too high, it will slow down the world economy and would trigger a global recession," al-Falih said. "And Saudi Arabia has been consistent in its policy. We work to stabilize global markets and facilitate global economic growth. That policy has been consistent for many years."
Meanwhile, markets have been agitated by looming US sanctions on Iran, which led to a bull run in early October culminating in a four-year high of $86 per barrel of Brent crude oil. When asked if $100 per barrel oil could be avoided, al-Falih said there were no guarantees.
“We have sanctions on Iran, and nobody has a clue what Iranians’ exports will be. Secondly, there are potential declines in different countries like Libya, Nigeria, Mexico and Venezuela,” he said.
“If 3 million barrels per day disappears, we cannot cover this volume. So we have to use oil reserves,” he added.
Saudi Arabia currently produces 10.7mn bpd and al-Falih said the country would raise output to 11mn bpd, with capacity to boost output to 12mn bpd. He noted that "we have relatively limited spare capacities and we are using a significant part of them."