LONDON, 28 February 2003 — Saudi Arabia could pump an extra 2.5 million barrels of crude oil a day if a Gulf war interrupted Iraq’s exports, the country’s oil minister said in remarks published yesterday.
In an interview with the Financial Times, Ali Al-Naimi said his country was currently producing no more than between 8 million and 8.1 million barrels per day against its 10.5 million barrels per day capacity.
But Al-Naimi scoffed at suggestions that output curbs by members of the Organization of Petroleum Exporting Countries had contributed to the recent rise in oil prices which on Thursday surged to their highest level in more than 12 years in New York.
“Current inflated prices have nothing to do with a shortage of supply, but everything to do with the uncertainty arising out of a possible war and its consequences,” Al-Naimi was quoted as saying.
GNI-Man Financial analyst Lawrence Eagles said Al-Naimi’s remarks could help explain why US supplies have remained at depressed levels in recent weeks, confounding expectations of a pickup.
“If his current estimate is correct then it would explain why the market is so tight and would also go against the general feeling that Saudi barrels will arrive shortly,” Eagles said.
The Saudi Arabian minister’s remarks appear to back up the stance of OPEC Secretary General Alvaro Silva Calderon who said on Thursday that the oil producers’ group “won’t use oil as a weapon” if war breaks out in Iraq and could increase production to offset price increases.
Meanwhile, OPEC is likely to establish a war contingency plan at its March 11 meeting that would suspend oil output quotas once hostilities start, senior officials and OPEC sources said yesterday.
“The price now is not due to any shortage or fundamentals, it’s psychological,” said one source.
