By SUMMER SAID
RIYADH -- Saudi Arabia's Oil Minister Ali al-Naimi said that
there is no reason for current high oil prices, which are
hurting European economic growth targets, but said the world's
largest crude exporter will do what it can to mitigate
Writing a rare opinion piece for the Financial
Times, Naimi sought to address consumer concerns on crude
supply and production capacity, as benchmark Brent prices that
have increased around 15% since the beginning of 2012 threaten
to derail the recovery in the troubled economies of Europe.
"High international oil prices are bad news. Bad for Europe,
bad for the US, bad for emerging economies and bad for the
world's poorest nations," Naimi wrote in the piece published on
the Financial Times website.
"The bottom line is that Saudi Arabia would like to see a
lower price," he said. "It would like to see a fair and
reasonable price that will not hurt the global economic
recovery, especially in emerging and developing countries."
Naimi mostly reiterated comments he made last week to
dismiss consumers' fears that the cushion of available oil is
getting thin amid fears of disruption to Iranian exports.
"It is the perceived potential shortage of oil keeping
prices high - not the reality on the ground," he said. "There
is no lack of supply. There is no demand which cannot be
"Total commercial stocks for OECD nations are within target,
and there is at least 57 days forward cover, enough to handle
almost any eventuality," Naimi said.
The Gulf state's current capacity is 12.5 million bpd, way
beyond current levels demanded, and a reliable buffer against
any temporary loss of production, he said.
"I hope by speaking out on the issue that our intentions -
and capabilities - are clear," he said. "We want to see
stronger European growth and realize that reasonable crude oil
prices are key to this."
Naimi's words are in stark contrast with consumers' remarks
earlier this month at a Kuwait energy conference, that the
amount of oil that could swiftly be brought on line if needed
The markets are tight ... therefore there is need for
more production, US Deputy Energy Secretary Daniel
Poneman said in Kuwait.
One major cause of consumer anxiety is that so-called spare
production capacity - the amount of idle output that can be
swiftly brought online if needed - is already more stretched
than it was in 2011, when Libya's exports shut down during a
According to the US Energy Information Administration, that
spare capacity stood at 2.5 million bpd on average in January
and February, compared with 3.7 million bpd in the same period
Iranian officials have also threatened to shut down the
Strait of Hormuz, the route used to ship most Gulf oil and
one-fifth of global supplies.
Markets are buzzing with talk that the US and UK might dip
into their reserves, something President Barack Obama and UKJ
Prime Minister David Cameron discussed earlier this month
without making any decisions.
Wednesday, the French government said it was in talks with
the International Energy Agency on whether to release crude
The news, coupled with data that show a sharp rise in US
crude inventories, forced oil prices lower Wednesday.
Dow Jones Newswires