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18 April 2024

No need to change oil output: Saudi

By Agencies


Saudi Oil Minister Ali Al Naimi sees no need to change production because market fundamentals are "healthy", according to an interview published on Wednesday in which he blamed record high prices on "tremendous speculation".

"This speculation has no link to the stable market fundamentals, which do not need any action," the London-based daily Al Hayat quoted Naimi, Opec's most influential voice, as saying in an interview ahead its meeting later on Wednesday.

"Why then should any new action be taken if the health of the market that we follow...is sound?"

In his first public comments since arriving in Vienna on Monday, Naimi echoed the sentiment of most of his Opec peers who have said they are inclined to maintain current output levels, resisting pressure to pump more oil to bring prices lower.

Washington says even a token output rise of 300,000 barrels per day (bpd) to 500,000 bpd from the Organization of the Petroleum Exporting Countries would help contain global economic woes by taming a rally that took oil to a record $103.95 on Monday.
Prices are up 66 per cent over the past 12 months.

But Opec, which pumps more than a third of the world's oil, says prices are being fuelled by factors beyond its control, such as a weak dollar and speculation, and not by any lack of crude.

It also fears that pumping more oil ahead of the weak second-quarter demand period could swell already high consumer nation inventories, creating a short-term glut.

"As the second quarter approaches there is no significant change in the market that merits a change in the current production level," the official UAE news agency WAM quoted Naimi as saying earlier in the day.

Naimi also noted the growing influence of financial traders who have ploughed billions into oil and commodity markets as a hedge against inflation and the weakening US dollar.

"The current oil price has no relation to market fundamentals, it is linked to futures...which are witnessing tremendous speculation," Naimi said in the interview. "There are even those who buy futures and speculate that oil prices will reach more than $200 in 2013."

"The (supply and demand) situation is stable and the most important thing that Opec and Saudi Arabia look at is the stability of the market fundamentals," he added.

US oil futures pared some early gains after Naimi's comments to stand 15 cents higher at $99.67 a barrel, off an earlier high of $100.19. Prices fell by nearly $3 a barrel on Tuesday, partly in response to concern about the US economy. (Reuters)