Tags: Saudi | Lower | Oil | Prices

Saudi Minister: We Want Lower Oil Prices

Thursday, 29 March 2012 01:43 PM

Ali Naimi, minister of petroleum and mineral resources in Saudi Arabia, says the Saudis will act to lower oil prices.

"It is clear that sustained high prices are starting to take their toll on European economic growth targets," Naimi writes in the Financial Times. "It is an unsatisfactory situation and one Saudi Arabia is keen to help address."

Needless to say, notes Naimi, Saudi Arabia does not control the price; it sells its crude oil according to international prices. However, the country remains the world’s largest producer, and the country with the greatest proven reserves.

"The bottom line is that Saudi Arabia would like to see a lower price," says Naimi. "It would like to see a fair and reasonable price that will not hurt the global economic recovery, especially in emerging and developing countries, that will generate a good return for producing nations, and that will attract greater investment in the oil industry."

“We want to correct the myth that there is, or could be, a shortage. It is an irrational fear, a fear without basis.”

Naimi says that Saudi Arabia’s current capacity is 12.5m barrels per day, way beyond current levels demanded, and is a reliable buffer against any temporary loss of production.

“Saudi Arabia has invested a great deal to sustain its capacity, and it will use spare production capacity to supply the oil market with any additional required volumes,” says Naimi. “For the record, as things stand today, our inventories in Saudi Arabia and around the world are full.”

And, if you look towards Canada and the U.S., these nations are increasing oil production this year and beyond, and further supplies are being contributed from Russia, South America, Kazakhstan and Azerbaijan.

The Seattle Times reports that oil prices dropped nearly 2 percent following reports that Western nations may be considering a release of oil reserves onto the world market. Government data showing an increase in U.S. supplies contributed to the decline.

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Thursday, 29 March 2012 01:43 PM
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