DALLAS, 25 April 2004 — Minister of Petroleum and Mineral Resources Ali Al-Naimi said on Thursday OPEC was committed to meeting the needs of oil consumers regardless of output quotas, adding that the organization should not be blamed for sky-rocketing US gasoline prices. “Regardless of what the ceilings are, the producers are responding to the need of the market to live up to their commitment,” he told reporters on the sidelines of a meeting of the World Affairs Council in Dallas. “There will be no shortage (of oil).”
The Organization of Petroleum Exporting Countries, which controls about half of the world’s exported oil, enacted a fresh cut of 1 million barrels per day to its self-imposed production quotas from April 1 to defend against a seasonal decline in global demand. Oil prices have been hovering near 13-year highs, with oil dealers fretting over thin inventories and flaring tensions in the Middle East that threaten to further hinder petroleum shipments from the energy-rich region.
US gasoline prices have also been zipping along at record levels over $1.80 a gallon, triggering worries that high energy costs could hobble economic growth in the world’s largest energy consumer - a spotlight issue in this election year. Gasoline futures on the New York Mercantile Exchange surged more than 4 percent to an all-time high at $1.1820 a gallon on Thursday.
Naimi added the Kingdom’s output could be brought up to 12 million or 15 million bpd using current technologies, “without much difficulty,” and run at those levels for 50 years. “There is a lot more oil to be found in Saudi Arabia,” he said in a speech to the council. Naimi declined to comment on whether he would support maintaining the current OPEC output quotas when the group meets on June 3 in Beirut. “Saudi Arabia is always for a moderate position in these affairs,” he said.
Naimi blamed high US gasoline prices on low production capacity in the United States, and said they were a factor in the run-up in crude oil prices. “The supply bottleneck is created by the lack of US refinery capacity,” he said.
“There are many factors that impact the changes in price (of oil). One of them happens to be the price of gasoline. Another one is funds moving into commodities ... It is not shortages of supply,” he said.
US refining capacity is about one million bpd too low to meet demand, Naimi said. “Saudi Arabia is willing and ready to invest in two new refineries and their associated marketing facilities in the US to alleviate bottlenecks,” he said.
