Bob Janjuah, a closely-watched strategist from Nomura Securities, told CNBC on Monday that Saudi Arabia, the largest producer within the OPEC oil producers’ cartel, will defend its current policy of preserving market share by enduring low prices.
“Oil can go up in the short-term but I think actually that there is some political motivations at play here and Saudi Arabia is at risk of losing its position as the marginal price-setter and I don’t think they want to lose that position,” Janjuah told CNBC Europe’s “Squawk Box.”
“I think the Saudis will potentially carry on [with their policy of not cutting production until marginal producers move out of the market] and production will remain high but my head target is $30 to $35 as where we could get to. Where prices are now, I think a $20 move is more difficult but I think that’s the risk out there,” he told CNBC.
Janjuah’s comments follow those of Saudi oil minister Ali al-Naimi who said again on Monday that: “If they [referring to countries outside of OPEC] want to cut production they are welcome. We are not going to cut, certainly Saudi Arabia is not going to cut.”
US crude prices have been in a death spiral since June, plunging from $109 to $47.95 on Monday — a decline of 56%.