Saudi has 'significant' spare oil capacity: minister
Saudi oil minister Ali Ibrahim Al-Naimi said on Monday that the Gulf kingdom had "significant" spare capacity to help stabilise oil markets despite the prospect of continued volatility.
"There is adequate spare capacity in the system, inventories in all key markets are ample and there is significant spare capacity in Saudi Arabia," Naimi told a UN forum on commodities in Geneva.
"The kingdom realises it has an important role to play in promoting stability in world oil markets," he added, underlining its past impact in working for a "well supplied and balanced" market.
"It is our ongoing policy to maintain at least 1 to 1.5 million barrels per day spare capacity to use wherever and whenever it be needed. Today it stands at about four million bpd," the petroleum and mineral resources minister said.
Naimi and a senior International Energy Agency official insisted there was little reason that growing demand from Asia, emerging nations and recovering western economies should outstrip supply and spark a return to record prices seen in 2008.
"While there is reason to be vigilant about price, the current situation is significantly different from 2008," Naimi said.
However, he claimed that recent shifts in oil prices had less to do with the physical state of the market than "gyrations with the value of the dollar" and the newly-established influence of speculative trading on oil by derivatives traders.
IEA Deputy Executive Director Richard Jones warned that political turmoil in the Middle East and North Africa was one of the "key certainties" hanging over oil.
"I mentioned the strength of the economic recovery, demand being one of those, but another one is the unfolding developments in the Mideast - North Africa region at this time, and we're all watching those very carefully obviously," Jones told the meeting.
Naimi reiterated that "a range of 70 to 80 dollars per barrels is an appropriate price for oil."
World oil prices rose to near the 100 dollar a barrel mark on Monday on fears that unrest in Egypt could disrupt deliveries for the West through the Suez Canal.
OPEC secretary-general Abdalla Salem El-Badri said the cartel stood ready to raise output should supplies be hindered.
© 2011 AFP