There’s No Oil Deal With US, Says Kingdom

JEDDAH, 6 June 2005 — Saudi Arabia has not signed any long-term agreement with Washington for supplying the United States with oil at fixed prices, according to Majed Al-Muneef, adviser to the minister of petroleum and mineral resources.

Addressing a seminar organized by the Council of Saudi Chamber of Commerce and Industry in Riyadh, he said the reports about oil deals with the US were baseless. “Oil prices are fixed by companies mediating between producers and consumers,” he explained.

Saudi Arabia, the world’s largest oil exporter, has been a major stabilizing force in the international oil market. During his April 25 meeting with US President George W. Bush at his Crawford ranch, Crown Prince Abdullah reiterated his country’s firm commitment to meet growing oil demand.

“The US appreciates Saudi Arabia’s strong commitment to accelerating investment and expanding its production capacity to help provide stability and adequately supply the market,” a joint statement issued after Prince Abdullah’s meeting with Bush said.

The Council of Ministers recently reaffirmed Saudi Arabia’s plan to increase production in accordance with international supply and demand. The Cabinet emphasized that Riyadh’s willingness to meet world energy requirements and challenges must be supported by joint international efforts.

Addressing the world energy conference in Washington last month, Minister of Petroleum and Mineral Resources Ali Al-Naimi said the Kingdom was ready to boost output in order to stabilize the market. “Saudi Arabia has already taken aggressive steps to ensure adequate supplies,” he said.

Naimi said Saudi Arabia was prepared to boost production from some 9.5 million barrels per day to 11 million bpd right away, “but there is no refining capacity (worldwide) to handle 11 million.” Muneef said the Organization of Petroleum Exporting Countries (OPEC) had succeeded in achieving two main goals: Increasing their oil revenues and raising their market share. “Saudi Arabia supplies 33 percent of OPEC’s output,” Al-Eqtisadiah daily quoted him as saying.