SAUDI ARABIA: OPEC has little influence on oil prices says Saudi minister

The Organisation of the Petroleum Exportin Countries (OPEC), of which Saudi Arabia is the largest, most influential member, has very little influence on current high oil prices, which are driven by many factors unrelated to market fundamentals, Saudi oil minister Ali al-Naimi told news conference in Riyadh on Tuesday (November 13). "There is a multitude of factors influencing the price which we have the least influence on, so I cannot say where the price is going to be, or what is driving it, except what we happening in the market," said al-Naimi. The Saudi oil minister said that "unfounded pessimism" was one of the factors behind high oil prices, which are not related to market fundamentals. Predictions of short term tightness in supplies and long term shortages were agitating speculators and funds, causing confusion, said al-Naimi. "The price today has really no reflection whatsoever with the fundamentals. The fundamentals do not support the current price," said al-Naimi. "Now the pessimism I am talking about are all the statements from many gurus of the industry, or experts, not necessarily the industry, but oil experts worldwide that talk about high demand, peak oil, we're going to run out in the next few years. All of these are the pessimists that are the agitating the speculators and the funds and so forth, who are really confused," he added. The Saudi oil minister said OPEC does not want prices to rise to levels that would negatively affect economies around the world. "We are really not interested in prices that negatively impact economic growth, or cause less prosperity, or is damaging to our environment," said al-Naimi. "But you know, the price needs to be fair for many players: consumers, producers, investors, and so forth. And that's the difficult formula: to say what the price should be," he added. Oil's surge from below $70 in mid-August to a record high near $100 a barrel last week has shone the spotlight back on OPEC, although most ministers have blamed speculation and politics -- not a supply shortage -- for the rally. Al-Naimi hinted that he did not believe that the global economy is threatened by current oil prices. "There are many economists around the world that have said to date the world economy is resilient and continues to be resilient, so that's all I can say," he said. Asked about Saudi Arabia's pledges to remain a reliable supplier of oil irrespective of any instability or turmoil in the Gulf related to U.S. policy towards Iran, al-Naimi said, "We are committed to be a reliable and dependable supplier for the world. We are not looking at any particular market, and so we will remain committed to that reliability and dependability." Al-Naimi said that a symposium of OPEC oil ministers that will take place in Riyadh this week and a conference of OPEC heads of state on Saturday (November 17) will not discuss prices or short-term production policy. OPEC's next official policy meeting is on Dec. 5. Al-Naimi also reiterated that Saudi production capacity stood at 11.3 million barrels per day (bpd) and would rise by another 500,000 bpd within the next two to three months. He said OPEC held 3 million bpd of spare capacity. Al-Naimi also reiterated that OPEC is closely watching for any signs of high prices damaging demand or hurting economic growth around the world.

ITN Source | November 14, 2007

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