CNBC anchor RON INSANA declared:
With OPEC News coming fast and furious from Beirut we thought it would be wise to catch up with someone who is in the midst of the action in the Middle East. Earlier today I had a chance to speak with Adel al-Jubeir, foreign affairs advisor to Saudi Crown Prince Abdullah. I began by asking him about the OPEC decision today to increase production.
Sir, I'd like to ask you about OPEC's decision today to increase production, not as much as Saudi Arabia wanted, but some sort of compromise between Saudi Arabia and Iran on this increase in production. Will your country get its way inside OPEC to boost production by 2.5 million barrels a day, rather than 2 million?
Mr. ADEL AL-JUBEIR (Saudi Arabia Foreign Affairs Advisor):
I believe we have already achieved that. It was a decision that was reached by consensus, 2 million barrels now, another half a million barrels in August, if required, with the understanding that should additional amounts of crude be required by existing customers we would be supplying them. So, we don't really see a contradiction with this decision.
INSANA: Now, what about the notion that OPEC countries are already producing flat out, that the spigot is open as far as it can go and there is no more capacity for OPEC countries, including Saudi Arabia, to pump more oil? Is that true or false?
Mr. AL-JUBEIR: That's not correct. The United Arab Emirates has some capacity, Kuwait has some capacity, very small for sure, Saudi Arabia still has capacity. We can produce 10.5 million barrels of crude a day for a sustained period of time. We can even surge, temporarily, in amounts above that.
INSANA: Is it likely that will happen?
Mr. AL-JUBEIR: We will do whatever it takes to ensure that there are no shortages of crude oil in the world markets. Period.
INSANA: And the price that Saudi Arabia would like to see for oil?
Mr. AL-JUBEIR: We believe that $40 oil is way too high. It will do damage to the world economy if it's sustained. If it's sustained it will damage future growth for demand for crude oil. We believe that prices should be back to where they should be, at a level between $22 and $28, and we are working hard to do so.
INSANA: Now, let me ask you about the risk premium for oil around the world today. There is a great deal of fear among oil traders and investors that another terrorist attack that might be far worse than the one we saw in Khobar over the weekend could entirely destabilize Saudi oil output. How secure are Saudi oil installations and how secure is the ability of Saudi Arabia to deliver oil out of port?
Mr. AL-JUBEIR: The oil facilities in Saudi Arabia are very, very secure. We have been very careful in terms of protecting them over the past 50 years. We recognize their strategic importance, and we recognize what a target of opportunity they could be for anyone who wants to do damage to Saudi Arabia or to the world economy. The facilities are over-engineered, there are redundancies built in. It is virtually impossible for anyone to get in a wreak the kind of damage that current speculators are afraid could happen. The terrorist have been attacking soft targets in oil towns, office facilities, housing compounds, but it's very, very difficult to get anywhere near the oil facilities that count.
INSANA: I would like to shift gears for a moment. At the upcoming G8 meeting this summer it is expected that the United States and a handful of other country will introduce a broad proposal to bring peace to the Middle East. From what you have ascertained, will there be any movement on that score and will there be acceptance in the Arab community of the US led proposals?
Mr. AL-JUBEIR: If it's with regards toward moving along the peace process between Israel and the Palestinians we welcome it. We have ben calling for it for years. In fact, a year ago, or two years ago the crowned prince of Saudi Arabia introduced a peace initiative. anytime the US is engaged in the peace process between Israel and the Palestinians it is a positive development.
If you are referring to what is called the Greater Middle East Initiative in terms of reform in the Middle East and in the broader Arab world our view has been that the Arab world is currently going through reforms. The Arab League has adopted an initiative like this. We believe that reform has to come from within in order for it to be effective. It has to be in line with a country's traditions and a country's values and a country's history, and it cannot be imposed from the outside.
INSANA: Now Tom Freidman wrote in today's New York Times that Saudi Arabia in particular needs to undergo some internal reforms that not only deal with democratization, but also education reform that promotes tolerance of other faiths and other creeds. Is that already underway, and to what extent? If so, would it blunt some of the movements in the extreme Islamic world to, in fact, sow violence around the globe?
Mr. AL-JUBEIR: Saudi Arabia is on a path of comprehensive reform: political reform by broadening political participation, introducing municipal elections, and moving along that path; economic reform in terms of opening up our economy, creating jobs, attracting foreign investment, making our court systems more efficient. And social and education reform in terms of reforming the educational system in Saudi Arabia, revitalizing it, making sure that our students get world-class educations, which allow them to get jobs. Reforms in terms of what is being said at the mosques and how Imams are being trained. Reform in terms of making sure that the voices of moderation and tolerance are heard and that the voices of intolerance are stifled. And that is what we have been doing.
But frankly, Ron, whenever you do good deeds nobody really reports on them. People tend to pick the things that stand out. But no, Saudi Arabia is committed to reform. We believe that we will become a much better country as a consequence, and we believe that we will become a much more successful country as a consequence.
INSANA: Our thanks to Adel al-Jubeir, foreign affairs advisor to Crown Prince Abdullah from Saudi Arabia.