DAVOS, Switzerland, 26 January 2003 — Saudi Arabia said yesterday there was no lack of oil in world markets despite fears of war in Iraq, signaling the world’s top oil producer has no intention to raise production further for the moment.
“There is no shortage in the market and there should be no reason for prices where they are today,” Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi told a panel discussion at the World Economic Forum annual meeting in the Swiss ski resort of Davos.
“We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no,” he said.
Oil prices have surged — topping OPEC’s $22-$28 a barrel target range — amid fears of a US-led war in Iraq and because of a seven-week-old general strike that has cut exports from OPEC member Venezuela. In the United States, the main buyer of Venezuelan crude, prices this week hit a two-year high of $35.20 a barrel, closing at $33.40 on Friday.
“We believe $25 is the right price to meet the interests” of producers, consumers, and world oil companies, Naimi said. “We will try to get it back at $25. That’s where we want it to be.”
OPEC two weeks ago raised production quotas by seven percent or 1.5 million barrels a day for 10 member countries.
Despite the extra oil, Naimi said prices remained high for fear of war in Iraq. “There are all these drums of war going around,” he said. “It has nothing to do with supply. We know there is a balance of demand and supply.”
Still, he pledged that Saudia Arabia and the rest of the Organization of Petroleum Exporting Countries would ensure sufficient supplies should an attack on Iraq and continued troubles in Venezuela continue to hamper world supplies.
“We have always said that regardless of the cause of the shortage, OPEC and Saudi Arabia will do their utmost to make up for the shortage,” he said.
His comments echoed those of OPEC Secretary-General Alvaro Silva, who told the high-powered gathering on Friday there was nothing more OPEC could do to rein in prices.
Naimi said oil prices would be above $40 a barrel now if Saudi Arabia had not maintained spare capacity of 3-3.5 million barrels a day. He declined to say exactly how much the Kingdom was pumping but reiterated that Riyadh could quickly boost oil output to full capacity of 10.5 million barrels per day. He said it would need around 90 days to get the infrastructure in place to support such high output levels in the longer term. (R)
