Saudi Arabia Vows To Lower Oil Prices
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Saudi Arabia’s oil minister Ali al-Naimi has promised that his country would boost its oil output by as much as 25 percent this year in order to calm fears about rising oil prices worldwide.
Speaking to reporters in the Qatari capital of Doha on Tuesday, al-Naimi described recent high oil prices as “unjustified” and said that the Saudi kingdom was more than ready to intervene in the market in order to lower the price of oil.
Saudi Arabia’s oil minister Ali al-Naimi has promised that his country would boost its oil output by as much as 25 percent this year in order to calm fears about rising oil prices worldwide.
Speaking to reporters in the Qatari capital of Doha on Tuesday, al-Naimi described recent high oil prices as “unjustified” and said that the Saudi kingdom was more than ready to intervene in the market in order to lower the price of oil.
[quote]”Oil prices today are unjustifiable on a supply and demand basis,” said al-Naimi as quoted by Reuters. “We really don’t understand why the prices are behaving the way they are.”[/quote]“I want to assure you that there is no shortage of supply in the market. OPEC is supplying what it needs, we have capacity, additional reserves of 2.5 million barrels (a day),” he added.
Saudi Arabia, the world’s top producer of crude oil, is presently pumping out 9.9 million barrels of oil per day (bpd). The kingdom is prepared to raise its output to its full capacity of 12.5 million bpd if the situation calls for it, claimed al-Naimi.
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Yet according to al-Naimi, supply of oil was already outpacing demand by more than 1 million bpd, despite the recent cut to Iranian oil.
“From our point of view, we have had no customer not satisfied. We have satisfied every request for every customer that has come asking,” said Naimi.
[quote]”We ask the customers, ‘Do you need more?’ and invariably the answer is ‘No thank you.'”[/quote]“We are ready and willing to put more oil on the market, but you need a buyer,” he said.
The impact of al-Naimi’s comments was felt immediately in the global market as international oil prices fell by nearly 2 percent on Tuesday. Benchmark U.S. crude fell $2.48 to $105.61 per barrel in New York while Brent crude lost $1.59 to $124.12 in London.
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But the drop still could not make up for the rise in oil prices so far this year, which has seen a 15 percent increase as tensions continue to grow around the Straits of Hormuz while international sanctions have affected Iran’s oil supply.
Though Kuwait’s ruler told his state news agency this week that Iranian officials had promised him that they would not block the vital waterway, experts have suggested that more should be done in order to assuage fears of an international oil crisis.
[quote]“If they (Saudi Arabia and Kuwait) can bring more barrels to refineries, then it could help oil prices cool off,” said independent oil analyst Jim Ritterbusch to the Washington Post.[/quote]“We have been seeing articles about increases in Saudi supply offsetting a reduction in Iranian oil since Friday,” said Tony Machacek, an oil futures broker at Jefferies Bache Ltd, to Reuters.
“But now combined with Libya coming back up and running and weak Chinese demand, it is all contributing,” he said.
