Falling oil prices? I'm more worried about terror: Norway PM

Norway PM: We can tolerate oil volatility

Norway may be Europe's biggest oil exporter, but its prime minister is less concerned about tumbling energy prices than security issues around terrorism and Russia. 

"I think most governments are more concerned about terrorism, security issues. We can handle oil prices going up and down, but what we can't handle are the security issues," Erna Solberg, Prime Minister of Norway, told CNBC on Friday. 

Her comments came after the death of Abdullah bin Abdulaziz Al Saud, the king of Saudi Arabia, the world's top oil exporter. News of his death saw Brent and light crude oil prices rise more than 1 percent on Friday, which analysts attributed to speculation based on uncertainty regarding Saudi's future oil policy.

Read MoreSaudi oil policy 'just took turn for the worse'

Kristian Helgesen | Bloomberg via Getty Images

Oil prices have fallen by around 60 percent since June last year, following four years of stability at around $105 per barrel. Oversupply is viewed as responsible for the sharp decline in prices, but Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) have so far refused to cut output. 

Solberg said that the change of leadership was unlikely to alter Saudi Arabia's oil policy, and added that she was more concerned that the new leader, Crown Prince Salman bin Abdulaziz Al Saud, continued with moves to gradually liberalize the country's hard-line conservative laws and allow women greater participation in social, economic and political life. 

 "The late king really had some reform programs that I hope will continue," she said. 

'One voice towards Russia'

Despite Solberg's reassurances on the country's ability to withstand seesawing commodity markets, the Norwegian central bank cut its benchmark interest rate this month, citing falling oil prices among other factor for a "clear slowdown" in the economy. 

Read MoreOil is not well for this energy-dependent country

Economic growth in the country—which is a member of neither the euro zone nor the European Union—has slowed in recent months. Norway posted growth of 0.5 percent between July and September 2014 quarter-on-quarter, just above the European Union average of 0.3 percent.

Europe's security was thrown into sharp relief this month when Islamist extremists killed 12 civilians at the offices of satirical magazine "Charlie Hebdo" in Paris, as well as four Parisians at a kosher supermarket.  Following the attack, U.S. President Barack Obama urged European government to try to better assimilate Muslim minority populations. 

For Norway, Russia's incursion into Ukraine is also a particular security concern, given its located close to Russia's western border and population of only 5.1 million. 

"A small country like Norway has to make sure that security and international law is abided by," said Solberg. 

"Norway has followed up on the same type of sanctions as the EU… we think it is important to have one voice towards Russia."

Read MoreScandinavia faces triple threat

Parts of eastern Ukraine remain under the control of pro-Russian rebels, who are believed to be backed by Moscow, and continue to battle with Ukrainian government forces. At least six civilians were killed on Thursday when a shell or mortar hit a trolleybus stop in the rebel-controlled city of Donetsk, Reuters has reported.