Jeddah, Saudi Arabia (AP) — Saudi Arabia is willing to produce more oil if customers need it, the kingdom’s oil minister said Sunday without citing any specific output increase.
Saudi Arabia, the world’s largest oil exporter, has been under intense pressure from the U.S. and other oil consumers to increase its crude output to help slow the soaring price of oil.
The kingdom already announced modest increases and said it would pump 9.7 million barrels a day beginning in July. But those increases have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday.
The high prices are affecting consumers and economies across the United States, Europe and much of the world. Many countries have experienced social unrest as rising fuel prices have driven significant increases in the cost of food and other basic goods.
The cost of gasoline has also become a sore point in the U.S. presidential race, with U.S. President George W. Bush and Republican candidate John McCain calling for lifting of a long-standing ban on offshore oil and gas drilling to increase domestic oil production. But Democratic candidate Barack Obama has said such steps will do nothing in the short term to ease American consumer’s pain.
It was unclear if Oil Minister Ali al-Naimi’s remarks Sunday at a high-level oil summit in the port city of Jeddah would quell concerns.
Al-Naimi, who was expected to formally make the announcements in a speech later Sunday, reiterated his government’s position that the recent run-up in prices has not been caused by a shortage of supply. But he said he also believes each country must do what it can “to alleviate these difficult conditions.”
“Therefore, given our current spare capacity, today I would like to state that for the remainder of this year Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July, if demand for such quantities materializes and our customers tell us they are needed,” al-Naimi said in the speech, a copy of which was obtained by The Associated Press in advance.
Al-Naimi also said that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure.
“In addition, we have identified a series of future crude oil mega-increments totaling another 2.5 million barrels per day of capacity that could be built if and when crude oil demand levels warrant their development,” he said.
Earlier Sunday, King Abdullah also said Saudi Arabia was not to blame for soaring oil prices and instead pointed his finger at speculators, high fuel taxes in consuming countries and increased oil consumption in developing economies.
“There are several factors behind the unjustified, swift rise in oil prices and they are: Speculators who play the market out of selfish interests, increased consumption by several developing economies and additional taxes on oil in several consuming countries,” the king said.
“Despite these facts and even though OPEC … has sought to meet demand, we find those who point the finger of blame at OPEC alone,” he added.
Abdullah urged the summit’s delegates to “uncover the truth” and dispel rumors to get the “real and full reasons” behind the skyrocketing price of oil.
The U.S. and other Western nations have put increasing pressure on Saudi Arabia to increase production, saying insufficient oil production has not kept pace with growing demand.
Saudi Arabia increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July — for a total of 9.7 million barrels a day.
Earlier Sunday, U.S. Energy Secretary Samuel Bodman again called on Saudi Arabia to increase production, saying it has not kept pace with growing demand.
Bodman said world oil consumption growth has averaged about 1.8 percent per year since 2003 with the largest share of that growth coming from developing countries like China, India and countries in the Middle East, he said.
But for the past three years, global oil production has remained constant at roughly 85 million barrels a day, and OPEC production has remained largely flat, he said in a written statement.
“I believe that most of us agree on one thing: Prices are too high at present. And unless we act, the situation will remain unsustainable,” he said in the statement.
The kingdom called for Sunday’s unusual meeting in Jiddah between oil producing and consuming nations as a way to show that it was not deaf to international cries that high oil prices have caused social and economic turmoil.
The Gulf nation also has become increasingly concerned that record oil prices could hinder growth in the U.S. and other major industrialized economies, potentially leading to a decline in oil demand and a sharp drop-off in prices.
Also Sunday, Abdullah called for the creation of a $1 billion energy initiative for poor countries to help them combat the rising cost of fuel. Many countries around the world have experienced social unrest by people angry that rising fuel prices have driven significant increases in the cost of food and other basic goods.
He also said Saudi Arabia would contribute $500 million to help give poor countries loans to finance development and energy projects.