Saudi Arabia’s oil minister spoke in Houston at the IHS CERAWeek conference, where he poured cold water on the prospect of a production cut.

Saudi oil minister Ali al-Naimi, one of the most important voices in the oil world, spoke at the conference on Tuesday. He first suggested that the production freeze being negotiated between several key OPEC members and Russia could be a building block. “Freeze is the beginning of a process, and that means if we can get all the major producers to agree not to add additional balance, then this high inventory we have now will probably decline in due time. It's going to take time," Naimi said.

That would echo the comments made by OPEC Secretary General on Monday. “This is the first step to see what we can achieve,” Secretary General Abdalla Salem El-Badri said at the conference on Monday. “If this is successful, we will take other steps in the future.” He declined to elaborate on what “other steps” might entail, but the markets took it as good news that a production cut was on the table. Oil prices surged by 6 percent on Monday. Related: Iraq On The Brink Of Chaos As Oil Revenues Fall

While Saudi oil minister al-Naimi seemingly backed that statement up on Tuesday, he followed that up with another comment that crushed the hopes of oil bulls. Speaking of the production freeze, he said: "It is not like cutting production. That is not going to happen because not many countries are going to deliver even if they say they will cut production, they will not deliver. So there is no sense in wasting our time seeking production cuts," he added.

Oil prices were trading higher just before those comments on Tuesday morning. However, after al-Naimi basically ruled out an OPEC production cut, oil prices crashed. WTI was down nearly 5 percent by 11:00 AM and Brent was down just over 4 percent.

By Charles Kennedy of Oilprice.com

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