Approachable oil minister keeps markets on the run
April 25, 2003, 6:34PM By SEAN EVERS and TOM CAHILL Houston Chronicle-Bloomberg Business News
VIENNA, Austria -- Saudi Arabian oil minister Ali al-Naimi, clad in a black Nike jogging suit and New Balance sneakers, set out Thursday morning for his regular loop of Vienna's ring road before an OPEC meeting.
The 67-year-old, who covers a little over three miles in half an hour, was pursued by three Lycra-clad bodyguards and some 10 reporters straining to catch words that rattle the $2 billion-a-day world oil market. Thursday, he told reporters OPEC is determined to keep prices at $25 a barrel by cutting production, foreshadowing the outcome of an emergency meeting.
Because of term limits in the Saudi kingdom, al-Naimi's run last week may have been one of his last in the Austrian capital. In eight years as the most influential voice in the Organization of the Petroleum Exporting Countries, al-Naimi has convinced members from Iran to Venezuela that stable oil prices are better than the swings between $40 and $10 seen in the 1980s and 1990s. During the past four years, oil prices averaged $24.57, almost in the center of OPEC's target range of $22 to $28 a barrel.
"Before his arrival, OPEC was defined by its public squabbling," said Bruce Evers, an oil analyst with Investec Henderson Crosthwaite in London. "Now they are businesslike, professional and do what they say they will do. Al-Naimi has to take a lot of the credit for that."
Al-Naimi, who shuns questions from reporters in the lobbies of Vienna's Intercontinental and Grand hotels, during his morning jog past Vienna's Hofburg palace and opera house not only discusses oil but opens up about everything from his seven grandchildren to hunting quail and pheasant. The minister also shoots turkey, which he said can be as tricky to predict as the price of crude.
"You have to have fun," the minister told the reporters, who in the past have rented bicycles to keep up with a man at least 30 years their senior. "Even maintaining the price of oil is fun. They say if I can keep it here for 10 years, they will give me a medal."
At 7:45 a.m. Thursday, Viennese commuters overlooked the 5-foot-2-inch man sharing their streets, the man who largely sets the price they pay at the gas pump by deciding how much oil to sell.
"He speaks softly and carries a very, very big stick," said Fadel Gheit, an oil industry analyst at Fahnestock & Co. in New York, who calls al-Naimi the Alan Greenspan of oil. "With Saudi Arabia's supply, he can single-handedly change the course of OPEC by adding or taking away product."
Al-Naimi has been involved in Saudi Arabia's oil industry since he was 12, working as an office messenger for state oil company Saudi Aramco, at that time controlled by four U.S. oil companies.
He benefited from the company's commitment to train and educate young Saudis. Eventually he received a bachelor's degree in geology from Lehigh University in Bethlehem, Pa., and a master's in geology at Stanford University in Palo Alto, Calif.
"I started as an office boy, doing the same thing as I did when president, shuffling papers from in-trays to out-trays," al-Naimi said as he jogged.
He rose to chief executive officer of Aramco, which was nationalized in the 1970s and now pumps more than twice as much crude as Exxon Mobil Corp., the largest oil company that is not state-owned. He was picked for the kingdom's top energy post in August 1995.
The nation influences prices by deciding how much to pump from its 10.5 million barrels of daily oil capacity, almost as much as that of its next four closest OPEC colleagues.
OPEC has "been acting prudently, and acting so as to ensure security of supply," said Claude Mandil, executive director of the Paris-based International Energy Agency, which was founded to represent the interests of 26 oil-consuming nations after the 1973 Arab oil embargo. "I'm confident they will make no decision that could be harmful to consuming countries."
Keeping oil prices around $25 a barrel has been al-Naimi's goal. He spent his first four years in office lobbying OPEC's second- and third-largest producers, Iran and Venezuela, to see the benefits of compliance with output quotas. The second four years fed off that cooperation.
Prices averaged about $17.50 during his first term and above $25 a barrel since 1999, a boon for states that depend on oil sales for as much as 80 percent of government revenues. Al-Naimi keeps it there by managing the market's expectations.
That's a far cry from November 1985, when oil prices started a plunge from $31.75 to $10 within months as the Saudis opened their taps to stop cheating by OPEC producers. By July 1986, some Persian Gulf crudes traded as low as $7 a barrel.
While OPEC has two regularly scheduled meetings a year, the group has had four in the past four months, and one is planned for June as members seek to anticipate moves in oil prices, rather than react.
The war in Iraq also raised concern of shortages and disruptions to Middle East supplies.
By Saudi Arabian law, oil ministers are limited to two four-year terms, with extensions at the discretion of the king. Al-Naimi said he really doesn't know if he will be out of a job.
"No matter what happens, I will come here personally to bring the press out on a run," he said with a chuckle and stepped up the pace. "Nobody lives forever. OPEC is healthy. It's going to do very well."