AMMAN, 16 May 2006 — Minister of Petroleum and Mineral Resources Ali Al-Naimi indicated yesterday that high oil prices of around $70 a barrel were giving rise to a crude surplus on the world market.
“There is no lack of capacity right now. Supply is ahead of demand,” Al-Naimi told reporters on the fringes of an Arab energy conference currently in process in the Jordanian capital.
Responding to a question whether high crude prices were forcing the adoption of conservation measures on the part of consumers, the Saudi minister said “In general, when prices are high, people check their pockets and when they are lower, they open them”. However, Al-Naimi averted a direct comment on a report issued on Friday by the Paris-based International Energy Agency (IEA), which cut its 2006 global oil demand outlook due to high oil prices.
“The IEA is a reputable organization. It publishes regular updates. Today (its report) is denting (demand) and tomorrow it is accelerating,” he said. The IEA cut its world crude demand estimates by 15 percent, or 220,000 barrels a day, as consumer countries around the world resort to conservation measures under the impact of high prices.
The agency said that it predicted oil demand to grow by 1.25 million barrels per day, to 84.83 million bpd. The agency’s previous estimate released in December put the growth in demand at 1.79 bpd.
Responding to a question whether the Organization of Petroleum Exporting Countries (OPEC) would reconsider its production quotas during the next meeting in Caracas on June 1, Al-Naimi said “Let us meet in Caracas”.
The 11-nation oil organization has frozen its daily production at 28 million bpd for the last ten months. Saudi Arabia, with an 11 million bpd daily output capacity, is the world’s largest crude exporter.
Qatar’s Oil Minister Abdullah ibn Hamad Al-Attiya told the conference earlier that OPEC should not be blamed for the surging oil prices on the world market, attributing high prices to “external reasons” including geopolitics.