WASHINGTON, 18 May 2005 — Saudi Arabia, the world’s biggest oil producer, said yesterday it was ready to boost output but called on consumers like the United States to do more at their end to bring down high prices.
Minister of Petroleum and Mineral Resources Ali Al-Naimi, attending an industry conference here with US Energy Secretary Samuel Bodman, also said that high or unstable oil prices “are not in the interest of producers”.
“Saudi Arabia’s reserves are plentiful and we stand ready to increase output as the market dictates,” he said at the conference sponsored by the Center for Strategic and International Studies.
“Saudi Arabia has already taken aggressive steps to ensure adequate supplies,” he said, rejecting fears that “black gold” will run out any time soon.
Last week Saudi Arabia, whose revenues have been swollen by a recent surge in oil prices, announced a series of projects worth tens of billions of dollars, including three massive refinery modernizations.
Naimi, however, said the market volatility cannot be blamed solely on producer countries.
“Rather the current impediments include for example the proliferation of product specifications, a myriad of regulations, infrastructure bottlenecks, and a lack of accurate and timely data needed to improve market transparency.”
Oil prices have fallen sharply over the past month to around $48 a barrel after peaking at $58.28 in early April because of fears of a massive supply crunch heading into the US summer driving season.
Reassuring noises from Saudi Arabia and its partners in the Organization of Petroleum Exporting Countries (OPEC) have eased the supply concerns, along with rising crude stocks in the United States.
Despite the fall in prices and the higher US inventories, Naimi said “we have no plans to reduce production”.
He said Saudi Arabia was prepared to boost production from about 9.5 million barrels per day (bpd) to 11 million right away, “but there is no refining capacity (worldwide) to handle 11 million”.
Producers argue there is plenty of crude oil to go round, but ageing refinery infrastructure in major consumers such as the United States is preventing more of the finished article such as gasoline reaching the market.
“Achieving stable global markets requires a global solution,” the Saudi minister said. Bodman said he was leaving Sunday for talks in the capitals of Russia, Ukraine and Azerbaijan, all oil exporters, “to stimulate extra supply from that part of the world”. But the US energy secretary acknowledged that the United States, the world’s biggest consumer, could do more for itself.
He renewed appeals to Congress to pass energy legislation being pushed hard by US President George W. Bush that would loosen regulations limiting oil exploration and give the industry major tax breaks.
“As painful as higher prices are ... I hope that it will stimulate our citizens to be more caring about how we use energy,” Bodman added.
The energy secretary said he had been reassured in bilateral talks with Naimi that Saudi Arabia’s investment plans would bring the necessary crude supply to the market.
“There is a great deal of oil available in the world. The challenge is the location of much of the oil,” Bodman said.
Meanwhile, oil prices fell toward three-month lows yesterday. US crude eased 6 cents to $48.55 a barrel after hitting $47.60 on Monday, the lowest level since Feb 18. London Brent crude was down 10 cents at $48.99 a barrel.