Prime Minister Datuk Seri Najib Razak addressing industry captains in Silicon Valley, San Jose. He noted that crude oil prices are likely to stabilise at the current US$30-40 a barrel and as such there is no need to make any more budget adjustments. Bernama Photo

SAN FRANCISCO: Crude oil prices are likely to stabilise at the current US$30-40 a barrel and as such there is no need to make any more budget adjustments, Prime Minister Datuk Seri Najib Razak said.

But should prices dip below US$30, then the government may re-look at its fiscal position, Najib told reporters covering his US trip to California.

Najib had in January recalibrated the 2016 Budget, taking into account the sharp drop of world oil prices. As such, the government revised the budget assumption price to between US$30 and US$35 per barrel from US$48.

“It looks like oil prices are going to likely stabilise between US$30 and US$40 per barrel, in the mid-US$30 for a while,” he said.

“If that happens, that’s within the range of our recalibration of the budget, so it

isn’t necessary for us to make any more adjustments.

“If it falls below US$30, then the government will re-look at our fiscal position,” said Najib, who is also finance minister.

Saudi Arabia and other OPEC producers have refused to reduce output in an attempt to drive less competitive players, in particular US shale oil producers, out of the market.

But in the first sign of OPEC and non-cartel producers cooperating after prices fell around 70 percent since mid-2014, Saudi Arabia and Russia said Tuesday they would freeze output if other major producers do the same.

Venezuela, Qatar and Kuwait also agreed on the planned freeze following talks in Doha.

Saudi Arabia's regional rival Iran surprised markets by saying that it too supported the move, sending prices soaring.

But on Thursday, Saudi Arabia said it was "not prepared" to cut oil production.

"If other producers want to limit or agree to a freeze in terms of additional production that may have an impact on the market but Saudi Arabia is not prepared to cut production," Saudi Foreign Minister Adel al-Jubeir told AFP.

"The oil issue will be determined by supply and demand and by market forces. The kingdom of Saudi Arabia will protect its market share and we have said so," he said in an interview.

Najib said he might travel to London in May to meet fund managers and investors as part of the government’s roadshows to engage with capital market players.

“We have decided to go on engagement and communications in various financial capitals around the world,” he said after meeting fund managers from 11 firms here. The fund managers manage total funds of US$7 trillion.

“Datuk Seri Wahid Omar (Minister in the Prime Minister's Department) has gone to Hong Kong, Singapore, London and San Francisco and in May, I hope to go London to meet investors including fund managers.”

“I think engagements can help them understand the situation and make them see through the noise level that’s has been created by some quarters,” he said.