"The price of oil ... has declined in recent months by more than 70% since reaching their highest level in July - a drop that will play a major role in aiding economic recovery," he told the Petrotech conference in New Delhi.

Crude oil has fallen steeply since it soared to a record above $147 in July and was trading at about $39 today as Opec kept up talk of production cuts.

He added: “These low oil prices are an important stimulus for recovery, translating into a boost of purchasing power in the billions or possibly trillions of dollars¿ essentially a welcome injection of liquidity into consumers’ pockets.

"Clearly these beneficial effects can speed the recovery of commercial economies.”

Naimi said a meeting of oil producers and consumers at Jeddah in June last year had helped moderate oil prices to an extent.

"This collaboration, combined with the kingdom's moderate price policy, aided price moderation for a short period," he said.

"However, because of the current worldwide economic and financial downturn, prices decelerated to levels not reflective again of market fundamentals."

Yesterday, Naimi said in New Delhi that Saudi Arabia would cut oil output next month to below its Opec target and the kingdom was prepared to go even further to halt the more than $100 collapse in prices.

The IRNA news agency cited Iran's Opec deputy governor Mohammad Ali Khatibi as saying oil supply still exceeded demand by about 1 million barrels per day and should be cut.

Naimi said Saudi Arabia had for some time been committed to the needs of the growing Asian market.

"Today I reiterate that commitment to Asian markets as part of the global co-operative effort toward energy security," he said.

He said oil producers wanted reasonable returns without hurting economic growth.

Published: 14 January 2009 11:09 GMT  | Last updated: 14 January 2009 15:15 GMT