Kingdom of Saudi Arabia Determined to Reduce Oil Prices

Saudi Arabia, the nation considered as the top exporter of oil, is determined to reduce high oil prices and is taking action with other members of the OPEC to achieve that goal. That was the recent statement released by Ali al-Naimi.

The Brent crude oil price has increased to almost 13% this 2012, with its recent trading of more than $120 per barrel and threatening an emerging recovery of the world economy. During most days of last year, oil has traded over $100.

In his Seoul visit, Naimi said that they are seeing an extended period of peak oil prices. He further added that the Kingdom of Saudi Arabia is not pleased with the cost of oil that is why it will give its best to pull down current crude oil prices.

In the early parts of this year, the oil minister said that a crude price per barrel of $100 is ideal for both consumers and producers.

Worries of supply disruptions due to output problems in several producing nations as well as anxiety on the sanctions of the United States and the West aimed at Iran’s oil exports have highly contributed to high Brent crude prices.

Naimi emphasized that there oil inventory in the world oil market is not deficient and Saudi is ready to utilize its spare production capacity when needed.

Moreover, the oil minister said that Saudi is producing 10 million barrels daily. That level of output is the highest since the month of November when the oil production of the country was higher compared to what it had made for several decades. Naimi said that the kingdom’s output capacity is around 12.5 million barrels per day.

Naimi reiterated that the issue is not the supply of oil because they have plenty of it.

Fellow member producers in the OPEC such as Iraq, Angola and Libya have raised its output according to Naimi. Canada, Russia and the U.S. which are not members of the OPEC have also increased their supplies.

Saudi supplies within and outside the country are plenty, said Naimi. This is also the case in industrialized nations which makes the country balanced without any deficiency in supply, added Naimi.

A two-year trend of tightening stockpiles alongside weakened demand and growth in Saudi Arabia’s output was finally broken in the oil markets, according to the EIA. According to the agency, raising supply and weakening demand growth may already lead to an important increase in the oil supply worldwide. It added that persistently high crude prices may possibly ease as soon as markets see the change in trend.