In a statement to the Saudi Press Agency (SPA) today, Minister of Petroleum and Mineral Resources Ali Al-Naimi attributed the increase in oil prices on the international market to such causes as the market's unwarranted fear of disruption in oil supplies from a number of oil-producing countries at a time when only the Kingdom of Saudi Arabia, with possibly two or three other countries, has spare production capacity. Another cause, he said, is the trend among traders and investors to purchase and maintain long-term contracts for commodities such as oil, commenting that this is a natural outcome of the robust growth of the international economy coupled with the low interest rate on deposits and bonds. Another cause is the shortage in some types of gasoline in the United States that can be expected in view of the stringent environmental regulations that have aggravated the crisis and contributed to price increases in both products and crude.
Minister Al-Naimi noted that the Kingdom of Saudi Arabia has been closely monitoring the market, and is in constant contact with its customers, the oil-importing countries. “The Kingdom's policy”, he declared, “is based on clear fundamental principles: advocating moderation in all issues, seeking oil market stability by working to achieve balance in demand and supply, and maintaining sufficient supplies to avoid price fluctuation that might have a negative effect on producers, consumers and the oil industry as a whole.”
Reiterating the Kingdom’s belief that increasing OPEC’s production ceiling is essential for keeping the balance of supply and demand, Minister Al-Naimi stated that demand will clearly increase, especially in Asia, in the second half of the current year, and estimated that supply should be increased by not less than one and half million barrels per day.
Minister Al-Naimi went on to say that the oil market situation will be discussed during the next ministerial meeting of the International Energy Forum, which is due to be held in Amsterdam within a few days. “I will meet there the oil ministers of OPEC countries”, he said, “and try to reach an understanding for an increase in the production ceiling at the extraordinary meeting of OPEC to be held in Beirut at the beginning of next month.”
[See the press release by Ambassador to the United States Prince Bandar bin Sultan]