Sharm Al Shaikh: Saudi Arabia’s decision to increase oil output is unjustified, according to fellow Opec members Iran, Iraq, Libya and Qatar, who blame record prices on a weakening US dollar rather than a shortage of supply.
“I don’t know on what ground they took this decision,” Shokri Ghanem, chairman of Libya’s National Oil Corp, said from Tripoli.
“I think it came in response to the many requests” of the US. “If they think it will help the market, I don’t think so because the market is already very well supplied.”
Saudi Arabia, the world’s largest oil exporter, said three days ago it will increase crude production next month to meet rising demand and a request by US President George W. Bush to ease the burden of record prices on the economy.
The kingdom will raise output by 300,000 barrels a day, or 3.3 per cent, to 9.45 million barrels a day in June, Saudi Oil Minister Ali Al Naimi said in Riyadh following a meeting between Bush and Saudi Arabia’s King Abdullah.
The decision failed to bring prices down, with crude in New York closing at a record $126.29 a barrel that day. Oil futures, which touched $127.04 in intraday trading yesterday, have doubled in the past year on soaring demand, supply disruptions and purchases by investors hedging against a declining dollar.
The Saudi response is “not enough” to address US energy needs, Bush told reporters yesterday in the Egyptian Red Sea resort of Sharm Al Shaikh, where he attended the Middle East gathering of the World Economic Forum.
Qatari Oil Minister Abdullah Al Attiyah said in a telephone interview at the time of Bush’s Saudi visit that there’s no need for more oil production or a meeting of Opec members before the organisation’s next scheduled conference in September.
The 13-member group produced 32.10 million barrels a day in April, according to Bloomberg estimates. The 12 members with a quota pumped 29.74 million barrels a day, little changed from their official target of 29.67 million barrels a day. War-torn Iraq is allowed to produce at will.
“Everyone is pumping as much as they can at the moment,” Iraqi Oil Minister Hussain Al Shahristani said in an interview yesterday in Sharm Al Shaikh.
“Iraq has added 500,000 barrels over the last six months and it has made no difference.”
“The Saudi decision would only increase inventories of crude stockpiled in consuming nations,” Iranian Oil Minister Gholamhossein Nozari said