BAKU, 4 June 2003 — Minister of Petroleum and Mineral Resources Ali Al-Naimi warned yesterday it would be “folly” to leave the market to determine oil prices, in a vigorous defense of the OPEC oil group.
His comments come at a time when oil industry insiders believe the United States may be seeking to use Iraqi oil, newly freed from United Nations sanctions, to challenge OPEC’s stranglehold on world oil prices.
Speaking at a conference in Azerbaijan, Naimi said if leading oil producers stopped setting prices, it would lead to “boom and bust cycles,” and economic crises in the world’s big oil consuming countries.
“I believe the choice is clear and easy to make,” he said. “It is folly of the highest order for producers, or even consumers, to choose a path that inevitably leads to chaotic conditions where planning is impossible.”
“Whenever cooperation is lacking it is impossible to plan for a stable oil market. Petroleum producers and consumers both miss out on the benefits of balanced supply and demand.”
After Saudi Arabia, Iraq has the world’s second-biggest oil reserves. With United Nations sanctions on the country now lifted, it can sell its crude freely on the world market.
Many observers believe the US will use its de facto control of Iraqi oil production to try to influence world oil prices, without consulting OPEC.
The US government favors lower oil prices than does the group.
There have been reports that the US is pressing Iraq not to return to OPEC membership now that sanctions are lifted.
But Naimi said there was no question of that happening. “Iraq is a founding member of OPEC,” he said. “Iraq is welcome, it will come.”
Naimi also said that the Caspian Sea states of Azerbaijan and Kazakhstan, which are soon to become major oil producers, were not seen as unwelcome competition by OPEC members.
“Let me say it loud and clear: new reserves and production from the Caspian area are not seen as a threat but as a welcome hope that abundant supplies of oil will be available to ensure the future health of the world economy.”
