OPEC says it’s not trying to put Russia in the poor house, even if it’s doing a good job of it.
Watch more about how low oil prices are affecting the global economy from Fortune’s video team:
Abdalla Salem El Badri, the secretary general of the Organization of Petroleum Exporting Countries, said his group’s decision to maintain production levels in November was not directed at any one country. “The idea that we are at war with U.S. shale producers or Russia is wrong,” said El Badri. “For us it was a pure economic reason.”
Speaking on a panel on Wednesday at the World Economic Forum in Davos, Switzerland, El Badri noted that he was not surprised by the drop in oil prices, and that prices may have even more room to fall. He said that back in November, OPEC forecasted that oil prices would drop to “$40 a barrel or lower.” On Wednesday, oil prices moved up slightly to around $47.
Russian officials, for their part, said that they will adjust to the lower prices. Arkady Dvorkovich, a deputy prime minister of Russia who participated in the same panel discussion, said that his country plans to use lower prices as an opportunity to boost its non-oil export sector. He said Russia planned to invest more in its high-margin export industries.
“We hope that all countries and all parties understand that lower oil prices will have a huge [negative] impact on our currency,” said Dvorkovich. “It will give us ability to export more.”
Faith Bristol, chief economist at the International Energy Agency, said that OPEC’s decision to maintain its production levels was not the only factor bringing down the price of oil. He said that fuel efficient cars and planes have also brought prices down. New rules that require cars to be more fuel efficient—first in the U.S., but more recently in China and India—have cut gas consumption. “Efficiency is the biggest competitor to oil,” said Bristol. “What’s surprising is that people are surprised prices are falling.”
Khalid Al Falih, the CEO of Saudi Arabia’s Saudi Aramco, said the issue is not that oil prices are too low now. The problem is they have been too high for the past few years. He said that oil prices for the past few years have been driven up by financial speculators looking to capitalize on fear of political problems in the Middle East and elsewhere. That trade didn’t work out, and that’s one of the reasons he doesn’t see oil prices marching back up soon. Those speculators have been driven out of the market, presumably by big losses. “Investment firms will be more careful now,” said Falih.