Saudi Arabia’s powerful oil minister, Ali Naimi, made a rare intervention into overheating oil markets on Tuesday, declaring that high oil prices were “unjustified” and vowing that the kingdom would boost its output by as much as 25 per cent if necessary.Mr Chazan must not have been paying attention or he would know that Mr al-Naimi trying to cause the supply and demand curves for oil to intersect at a different place by jawboning them is a regular feature of the oil world. It usually has a rather small effect on the price that lasts a day or two. The thing that would actually affect prices, pumping more oil, he always rejects on the same tired grounds:
Asked if it could ease prices by exporting more oil, he said customers were not asking for additional crude. “We are ready and willing to put more oil on the market, but you need a buyer,” he said.There was one interesting new comment:
Speaking to reporters in the Qatari capital Doha, Mr Naimi said he wanted to “dispel this pessimism in the market” and the widespread fear that the world could see a repeat of 2008’s oil price increase which was a harbinger of the global recession.So he is now admitting that maybe supply was a little strained in 2008. Of course back then he was making no such admission, but instead was making exactly the same excuses as today:
“I think high prices are unjustified today [on] a supply-demand basis,” he said. “We really don’t understand why the prices are behaving the way they are.”
Supply was “much more firm today than in 2008” when crude rose to $147 a barrel, he said, with global supply now exceeding demand by 1m-2m barrels a day.
"A year ago prices were in the range of $ 65 a barrel; now, they are almost double that," Ali I. Al-Naimi told participants. "What has happened during this relatively short period of time? Between the second quarter of 2007 and the second quarter of 2008, global demand rose by an estimated 800,000 to 1.2 mm bpd, but at the same time global oil supplies rose between 1.4 and 1.6 mm bpd -- substantially more than the increase in demand. Accordingly, days of forward cover increased from roughly 52 to 54 days during the last 12 months, and inventory levels are currently well within their normal range."and
The minister assured the world that Saudi Arabia -- and Saudi Aramco -- was ready to do whatever it could to calm the current situation.Of course, they never did produce any more - but he certainly didn't admit they couldn't. Instead, it was the same story about customers not wanting any more oil:
"Given our current spare capacity, today I would like to state that for the remainder of this year Saudi Arabia is prepared and willing to produce additional barrels of crude oil above and beyond the 9.7 mm bpd, which we plan to produce during the month of July...
...if demand for such quantities materializes and our customers tell us they are needed," he said, detailing the current round of megaprojects and the massive hydrocarbon increments they will bring to the marketplace.You wouldn't expect a journalist to go look that up though, would you?