Saudi Oil Minister has announced his country is ready to fill any oil supply gap – ‘perceived or real’ – in a bid to rein in rising oil prices. The statement comes a day after reports suggested Washington is pressing the Saudis to boost its oil output in order to fill a supply gap arising from economic sanctions on Iran.
“Today the oil market is generally balanced and there is ample production and refining capacity … Saudi Arabia and others remain poised to make good any shortfalls – perceived or real – in crude oil supply,” Oil Minister Ali Al Naimi said on Wednesday in a speech at the International Energy Forum.
Many analysts see the statement by the senior Saudi official as a u-turn on its oil policy which earlier tied production hike to increased costumer demand.
Saudi Arabia is the only OPEC producer with spare production capacity and oil importers around the world are looking up to Riyadh to ramp up supply in order to plug the gap caused by US-led sanctions on Iranian oil industry.
The European Union’s embargo on Iranian oil exports comes into effect on 1 July while its cooperation with the US on economic sanctions is already denting Iran’s ability to conduct financial transactions around the world.
Oil prices have seen a sharp increase since the beginning of the year, hovering at around $125 a barrel during the last few days, amid speculation of a new US war on Iran and an Israeli attack on the Islamic Republic’s suspected nuclear facilities.
Riyadh has reiterated it has the capacity to increase production to 12.5 million bpd. According to some oil analysts, its output is already running close to record highs of about 10 million bpd. Tehran, on the other hand, produces below 3.5 million bpd and exports around 2.2 million bpd to world markets.
Oil ministers and delegates from the 88-member International Energy Forum (IEF) are holding their biennial three-day gathering in Kuwait to discuss the role of the forum in stabilising world energy market.
Kuwaiti ruler Sheikh Sabah al-Ahmad al-Jaber al-Sabah said in the inaugural speech that his country has been taking part in this dialogue since 1991 as a member of the forum’s executive council. He emphasised the importance of the forum as a viable vehicle for purposeful dialogue between energy producing and consuming nations.
However, the West-Iran standoff appeared to be a taboo subject at the Forum, with neither of the GCC oil ministers nor OPEC’s Secretary General Abdalla al-Badri mentioned the tensions in their speeches and focused instead on the need to curb the role of speculators and introduce regulatory reforms to reduce excessive volatility in oil markets. Meanwhile Iran’s oil minister Rostam Ghasemi took a swipe at the US-led sanctions with caution.
“Unfortunately some big countries who are among the major energy consumers, view oil as one of the basic constituents in their military, security and political strategies and use it as a political tool against oil producing countries,” Ghasemi said in his speech.
“Exerting unilateral economic constraints of political instigations is a threat, which jeopardizes free trade and continuity of oil supply in the world,” the Iranian minister warned.
Iran is the world’s third largest oil exporter and supplies 20 per cent of EU’s crude demands.
Sources: Reuters, Arab Times Online