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. Last Updated: 07/27/2016

Saudi Officials Signal Intention to Steady Oil at $50 Per Barrel

NEW YORK -- Saudi Arabia, which benefited immensely from record oil prices last year, has sent signals in the past two weeks that it is committed to keeping oil at around $50 per barrel -- down $27 from the summer peak that shook consumers across the world.

The indications came in typically cryptic fashion for the oil-rich kingdom. In Tokyo last week, Ali al-Naimi, the Saudi oil minister, said Saudi Arabia's policy was to maintain "moderate prices." The previous week he effectively vetoed an emergency meeting of the Organization of Petroleum Exporting Countries to prop up prices after oil briefly dropped below $50 per barrel, the lowest level in nearly two years.

The events that propelled oil prices above $77 per barrel last July, then dragged them down again, were beyond the control of any single producer. Still, Saudi Arabia, which is by far the largest oil producer within OPEC and sets the cartel's agenda, is seeking to avoid a repeat of the dramatic rise in prices while trying to put a floor beneath them.

The recent slide back to $50 per barrel for oil -- which translates to about $2 for a gallon of gasoline -- has eased the pressure on the U.S. economy, quieting talk that oil prices and the declining housing market may lead to a recession.

The Saudis appear to be rediscovering that painfully high energy prices take a profound toll on the global economy, which in turn reduces demand for their oil. Other motives seem to be at work, too, including the Saudis' desire to restrain Iran's regional ambitions.