2004 Transcript

Adel Al-Jubeir discusses the oil situation with CNN’s Wolf Blitzer

Crown Prince Abdullah's foreign affairs advisor Adel Al-Jubeir was interviewed on CNN by Wolf Blitzer, who introduced the segment by saying:

Saudi Arabia is the world's biggest oil exporter, the main player behind OPEC's decision to boost oil production.  Joining us now with some insight into why the oil cartel is taking such a step is Adel Al- Jubeir.  He's the Saudi foreign affairs adviser to the crown prince.

Thanks, Mr. Al-Jubeir, very much for joining us.


BLITZER: What's your reading on what's happening in Beirut right now?

AL-JUBEIR: They had a meeting where the OPEC countries agreed, as Brent pointed out, to increase the quotas by two million barrels now, and then a second stage to increase them by 500 million barrels in August if there is a requirement to do so.

BLITZER: When you say if there is a requirement, there seems to be growing and growing demand for oil, especially from China.  And that seems to be propelling a lot of this boost in the price per barrel.
AL-JUBEIR: That is one factor.  What we have also been noticing is that inventory levels for both crude, as well as for product in the U.S., have been coming up.  The most recent report, which came out I believe yesterday, indicated that.  So we watch the situation to make sure that we don't have a crash that ends up ruining all of us.

Our objective is to bring the price down to the price band (ph) of OPEC between $22 and $28 a barrel.  If more oil is required, we'll produce it.

BLITZER: Is that realistic to bring it down that low?  Right now, it's hovering around $40. It might be $38 a barrel right now in trading in the New York markets.  But is it realistic to bring it down into the $20s again?

AL-JUBEIR: I believe so, yes.

BLITZER: How long will that take?

AL-JUBEIR: We don't know because, as I mentioned, there are several factors.  One factor is the speculation on the part of hedge funds that's putting upward pressure on the price of crude oil.  The second factor is the refining shortage in the U.S., which is driving gasoline prices up, which, in turn, are pulling crude prices up.  A third factor is concern about the geopolitics and instability in the Middle East, which is causing there to be a premium...

BLITZER: Because on that specific point, the insurance costs right now, especially in the aftermath of what's happened in Saudi Arabia, there's a growing piece.  Let's say it's $35 or $40 a barrel. A big chunk of that is just to pay for insurance because traders are worried.

AL-JUBEIR: Right.  And then the fourth element is growth and demand, as you pointed out.  In particular, in China, India, and other places.
We can take care of the issue of demand by producing more, and we have been.  We're not going to turn back any customer who wants crude oil from Saudi Arabia.  The markets will be well supplied.
We believe that the first three factors I mentioned have to do more with psychology.  And once the traders realize that there is plenty of oil and that the oil facilities in Saudi Arabia are very, very secure, we believe that market sentiment will begin to change and we'll see prices trending downwards.  We don't believe the price of oil should be above $30 on the mercantile exchange, which translates into about $28 for the basket of crude oil, which would put us within the range that we believe is moderate and desirable.

BLITZER: A lot of our viewers remember what Bob Woodward wrote in his book.  That in October, on the eve of the election, the Saudis, a good friend of President Bush, will go ahead and increase production to lower the price economically, times would improve in the United States, presumably, and that would help President Bush get re-elected. Give us your sense of all of that at this point.

AL-JUBEIR: I think that that's fiction.  Saudi Arabia's policy over the last 30 years has been very clear.
We believe that prices should be at moderate levels so that consumers are not hurt and producers are not hurt.  Whenever prices trend upwards, we increase production to bring them down.  Whenever they come crashing down, we work with our OPEC friends in order to stabilize the price of oil, because instability hurts all of us.

And we do this irrespective of who's in the White House.  And so to think that politics will be driving decisions involving oil is undermining the very future of our most precious commodity.

BLITZER: Let's talk about these most recent terror attacks at Khobar in Saudi Arabia.  In your opinion, assuming this was al Qaeda or some sort of affiliated al Qaeda organization -- I assume you believe that to be the case.


BLITZER: Was this designed to rattle the oil markets, if you will, to make it seem that Saudi Arabia oil supplies were in danger of continuing?

AL-JUBEIR: That certainly is one factor.  I believe another factor is to try to solve fear and panic in people's hearts and cause foreigners to leave Saudi Arabia.  Believing that if foreigners leave Saudi Arabia, the Saudi economy would shut down, which is not correct. Over 90 percent of the employees in the oil sector in Saudi Arabia are Saudis.

BLITZER: Because, as you know, the State Department is urging Americans to leave Saudi Arabia.

AL-JUBEIR: Yes, yes.  But that's a decision the U.S. government will have to make.  We believe that the situation in Saudi Arabia is safe.  We believe that we have the terrorists on the run.
We see it in how they conduct their operations.  They no longer go after high-value targets, but they go after innocent people.  And that indicates to us that they're on the run.  We' are determined to go after them and we're determined to bring them to justice.

BLITZER: It's a whole new ball game right now in Saudi Arabia as far as the terror threat is concerned, isn't it?

AL-JUBEIR: Absolutely.  We have not had a situation like this in our history.  We are learning, we are equipping ourselves, we are dealing with it.  And we will weather the storm and, god willing, we will destroy them.

BLITZER: And the announcement you made yesterday, saying that you're going to have a much closer look on the charitable contributions, where they're going, how big of an impact do you think that will have on the funding of al Qaeda or related terror groups?

AL-JUBEIR: Well, what we wanted to ensure is that there is no doubt in terms of where Saudi money is going so that accusations are not leveled against Saudi Arabia.  Approximately a year ago we froze all foreign charitable activities. We told them you cannot send money outside the country until we come up with a mechanism where we can assure donors that their funds are actually going to reach the intended recipients.
Several months ago, (UNINTELLIGIBLE) the new national commission was established.  And then it took several months to put meat on the bones, so to speak, come up with a board of directors, come up with policies and procedures and so forth.  And now we're in the process of folding all Saudis charities that operate abroad into this new entity .
We believe that it will give us transparency.  We believe it gives us oversight.  We believe it gives us control.  We believe it will reassure donors that their money will be put to good use.

BLITZER: A quick thought, if you want to share one on George Tenet's decision to step down.  He's had a good relationship with the Saudi intelligence community, as you well know, for many years.

AL-JUBEIR: Yes, George Tenet had an excellent relationship with Saudi Arabia, as have previous directors of the CIA.  His decision to step down, as he indicated, is for personal reasons.  And I can't second guess him on why he decided to do it at this time.  But we wish him luck.

BLITZER: We'll try to find out why he exactly did it.  But that's going to be our reporting, not necessarily yours.

AL-JUBEIR: Correct.

BLITZER: Adel Al-Jubeir, thanks very much for joining us.

AL-JUBEIR: Thank you.