WASHINGTON, 28 April 2004 — Amid international worries over high oil prices, Saudi Arabia’s minister of petroleum and mineral resources said yesterday that his country remains committed to a $22-to-$28-a-barrel range. But the minister, Ali Al-Naimi, said Saudi Arabia and other members of the Organization of Petroleum Exporting Countries have only limited ability to control international prices.
“Saudi Arabia continues to be committed to OPEC’s $22 to $28 a barrel and believes OPEC’s basket $25 is a fair one for both consumers and producers,” Naimi told an energy conference in Washington.
OPEC’s price range is based on a basket of the seven different qualities of oil produced by member nations. But the world’s industrial powers have expressed growing concern at high oil prices, and it has become a presidential election issue in the United States.
The minister’s comment appeared to be an attempt to counter Indonesia’s Energy Minister Purnomo Yusgiantoro, the current OPEC head, who said earlier that the organization was considering increasing the price range by at least $4, according to Mike Fitzpatrick, an analyst with Fimat.
Naimi added that “oil markets are complex and even Saudi Arabia and other OPEC members with large reserves have only limited ability” to impact prices. The minister insisted, however, that “there is no general shortage of crude oil on the market.”
According to Naimi, “stability” in producer countries, the value of the dollar and, in the case of the United States, refining capacity all had an impact on prices. He said Saudi Arabia is “willing and ready to invest in two new refineries in the US,” with a capacity of 500,000 barrels a day.
Naimi said there are signs that global oil inventories have begun to build, and Saudi Arabia will continue to monitor developments very closely.
At the end of January, total crude oil and petroleum stocks held by industrialized countries stood at about 2.5 billion barrels, or 73 million barrels above the year-ago level, according to the International Energy Agency.
China’s fast-growing economy is probably using more crude oil than experts estimate, Naimi said yesterday. “If anything, people are underestimating China’s demand. By how much, I do not know,” Naimi said.
Naimi said he has regularly visited China since 1992 and witnessed its economic growth.
China is the world’s second-largest oil consumer after the United States, and imported about 2.25 million barrels per day of crude oil in March.
Guy Caruso, head of the US Energy Information Administration, said world oil demand is forecast to grow briskly from 80 million bpd in 2003 to 120 million bpd in 2025.
Iran’s Oil Minister Bijan Namdar Zanganeh said Sunday that he believed an oil price hovering around $28 per barrel would be a “good price” for OPEC. However he said the security situation in the Middle East meant it was impossible to make any forecast of a price drop.
Sharp rises in crude oil prices are highly unwelcome for both inflation and growth, though the euro zone economies should be able to survive them, the head of the European Central Bank said in an interview published by the Financial Times on Friday.
International oil prices have been high for several months.
The price of benchmark Brent North Sea crude oil for June delivery gained 62 cents per barrel to $34.20 in late deals here. New York’s reference light sweet crude June contract rose 28 cents to $37.25 in early trading.
