Saudi can offset any Libya oil supply gap – IEA chief

Saudi Arabia is capable of offsetting any shortfall in global oil supplies due to the current turmoil in Libya, the head of the International Energy Agency said yesterday.

Saudi Arabia “can supply any gap. Even if Libya may stop exportation totally ... Saudi (Arabia) can offset or Saudi (Arabia) can (make up) ... this oil demand,” Nobuo Tanaki told reporters.

A popular revolt against Libyan strongman Muammar Gaddafi’s 40-year-old regime has hit Libya’s oil production of around 1.6 million barrels a day, some 85 per cent of which normally goes to Europe, according to the IEA.

Saudi Arabia, OPEC’s largest producer, said on Monday it was “committed to the stability of the market” and to ensuring that oil supplies remain available to offset the fall in Libyan oil exports.

“The current situation is very different from 2008 when the price went up to $147 because we have plenty of spare capacity in the producing countries like Saudi (Arabia),” Tanaki said.

“We don’t have to worry too much about the supply side,” he stressed, adding again that “globally we have plenty of spare capacity.”

The head of the Paris-based IEA did however express concern about oil prices hitting $100 per barrel on concerns at the problems in Libya and the popular unrest across the Middle East and North Africa.

“We are concerned about what is happening in North Africa and the Middle East. That is making the market very nervous about future interruptions,” the IAE chief admitted.

Tanaki warned that the global economic recovery could be hampered, particularly in emerging economies, if the current $100 price tag were to last throughout the year.

“If the $100 price continues all through this year, it will make harder the economic recovery, especially in emerging economies,” the IEA chief said.

New York’s benchmark crude oil futures contract shot back above $100 yesterday due to the unrest in the Middle East while Brent crude was above $115.