Gulf oil producers yesterday assured consumers of sufficient crude supplies to help stem rises in oil prices fuelled by sweeping unrest in the Middle East and speculations.
“Certainly, Saudi Arabia’s position in the world oil market is based on its commitment to maintaining spare capacity for the sake of price and market stability,” Saudi Oil Minister Ali al-Naimi said.
Mr Naimi told a roundtable meeting for Asian energy ministers that the kingdom had a spare capacity of more than 3.5 million barrels per day which Riyadh can use whenever the need arises.
On Sunday, Mr Naimi said Saudi Arabia was ready to supply crude as demanded by customers, but he had acknowledged that the kingdom’s oil output fell to 8.29 million barrels per day in March from as high as 9.1 million in February.
Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah said the situation now is different from 2008, when oil prices shot to an all-time high of $147 a barrel, because of abundant spare capacity.
“The situation in 2011 is quite different from 2008 due to the availability of surplus capacity in crude oil production and refining capacity as well as the high inventories,” Sheikh al-Sabah told the meeting.
But he said the “volatility of prices poses a significant dilemma”, attributing the sharp rise in crude prices to a combination of factors.
“The increase in oil prices is due to the loss of large volumes of sweet crude from the market (Libyan oil), expansionary monetary policy, a weak dollar, fear of spread of political unrest to other producers, and the resilient demand in south-east Asia,” the Kuwaiti minister said.
He also said that oil traders are driving prices higher and amplifying price signals, amid rife speculation.
Oil dipped in Asian trade Monday as traders locked in profits after gains last week, but analysts said prices could still go higher.
Also yesterday, Opec secretary general Abdullah El-Badri too said the oil cartel was “concerned” at the high crude prices amid fears of lower supply, although he added that markets were adequately stocked. “We see that there is a $15-$20 dollar premium risk at this time,” Mr Badri told reporters in Kuwait. New York’s main contract, light sweet crude for delivery in May fell 78 cents to $108.88 a barrel in the afternoon, while Brent North Sea crude for June eased 49 cents to $122.96.