Oil Price Slips as Saudi Prince Alwaleed bin Talal Warns of West's Fracking Boom

The price of oil slipped after a billionaire Saudi prince warned of the threat posed to his nation's revenues by the shale gas boom in the US.

In an open letter to the Saudi oil minister Ali al Naimi, Prince Alwaleed bin Talal said advances in fracking technology were likely to reduce global demand for Saudi oil.

Demand for oil from Opec countries was "in clear and continuous decline", Prince Alwaleed wrote in a letter published on his Facebook page.

On the New York Mercantile Exchange, the price of light sweet crude futures for delivery in September fell 0.61% to trade at $104.07 a barrel.

Prince Alwaleed, who is ranked the world's 26th-richest man by Forbes magazine with an estimated net worth of $20 billion, said the kingdom's reliance on oil was "a truth that has really become a source of worry for many".

"The world's reliance on OPEC oil, especially the production of Saudi Arabia, is in a clear and continuous decline," wrote Prince Alwaleed, adding that the threat from shale gas was "definitely coming".

He added that the world's biggest crude oil exporter should implement "swift measures" to diversify its economy.

Oil minister al Naimi said publicly in May that he was unconcerned about rising US shale oil supplies. But Prince Alwaleed, who owns the international investment firm Kingdom Holding, disagreed.

The prince said: "Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92% of the budget for this year depends on oil.

"It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately."

The prince is renowned as outspoken for a Saudi royal, but his intervention reflects growing private concern in the Saudi regime about the long-term impact of fracking technology.

Fracking, which involved hydraulic drilling into rock to release trapped gas, has resulted in a gas boom in the US, reducing dependence on Opec oil.

Analysts believe rising US shale energy supplies will push global oil prices down sharply over the next decade.

Chancellor George Osborne has brought in tax breaks to spur UK investment in fracking, with firms such as Cuadrilla carrying out explorations in Britain, despite protests by environmentalists.

While most Saudi officials say in public they are not worried by the shale threat, Opec has recognised the need to address the issue.

In a report earlier this month, the organisation forecast demand for its oil in 2014 would average 29.61mbpd, down 250,000bpd from 2013. It cited rising non-Opec supply, especially from the US.

Saudi Arabia is the world's second biggest oil producer, accounting for 12.9% of production, while the US is the world's biggest consumer, responsible for almost 22% of oil demand.