RIYADH (AFP) — OPEC kingpin Saudi Arabia sought on Tuesday to reassure oil consumers and calm markets amid soaring prices, saying ahead of an OPEC summit that the cartel can meet demand and ruling out a shortage of crude.
Fears of insufficient supplies are “groundless,” Oil Minister Ali al-Nuaimi told reporters in Riyadh, where a two-day OPEC summit gets under way on Saturday.
“The prices today have really no relation with the fundamentals,” he said.
“I believe OPEC in general and Saudi Arabia in particular have demonstrated their ability to respond very quickly to any disruption,” he added.
“So I don’t foresee the tightness (in the market) that pessimists are talking about.”
Nuaimi said there was “no room” for pessimism and “no reason for it to push the prices to where they are today.”
Oil prices have surged to almost 100 dollars a barrel in recent weeks but they dropped back on Tuesday as the International Energy Agency lowered its global demand forecast for crude.
But Nuaimi, who speaks for the world’s top oil producer and exporter, suggested that the Organisation of Petroleum Exporting Countries was unlikely to decide on an output hike to calm markets during the Riyadh heads of state meeting, the third such summit.
“This is not the normal OPEC meeting. This is not the place to focus on prices, incremental production,” he said, adding that the themes of the summit would be “reliability, prosperity and protection.”
Oil prices fell Monday after Nuaimi told reporters during a visit to Kuwait that OPEC will “discuss this issue” of a possible output increase when it meets, without specifying whether he was referring to the Riyadh summit or a December 5 ministerial meeting in Abu Dhabi.
His remarks on Tuesday indicated that an eventual increase in production would have to await the Abu Dhabi talks.
But he also argued that a production hike would not in itself bring down prices.
“The price of oil is a market-determined process… There is a multitude of factors” driving prices, Nuaimi said, citing the dropping dollar rate.
“I cannot say where the price is going to be or what is driving it.”
Nuaimi repeatedly stressed what he called the “reliability” of OPEC producers while chiding industry experts who spread pessimism about supplies.
Such pessimism is damaging and “results in fluctuations of prices on the market,” Nuaimi said.
Underlining the theme of reliability, Nuaimi noted that Saudi Arabia was currently producing nine million barrels of oil per day (bpd) but has an output capacity of 11.3 million bpd.
He said the Gulf kingdom would within three months further expand its production capacity by around 500,000 bpd and then raise it to 12.5 million bpd by 2009.
“I hope these figures will help reduce any apprehensions in the world, which are groundless, regarding the reliability of supplies,” Nuaimi said.
“We stand as Saudi Arabia and as OPEC for being the most reliable suppliers of petroleum.”
Oil futures have pulled back from a record-breaking run that pushed them to all-time highs last week of 98.62 dollars in New York and 95.19 dollars in London.
New York’s main contract, light sweet crude for December delivery, shed 82 cents on Tuesday to 93.80 dollars per barrel. In London, Brent North Sea crude for December delivery fell 76 cents to 91.22 dollars per barrel.