Saudi Arabia, the world’s largest oil exporter, is “not comfortable” with the current crude price and is concerned about its effect on global economic growth, the head of the state oil company said.
Saudi Arabia is committed to keeping aside a “sizable cushion” of 3 million to 4 million barrels a day of idle production capacity to stabilize the market, Khalid al-Falih, chief executive officer of Saudi Arabian Oil Co., said today in Seoul. The kingdom pumped 9 million barrels a day last month, the most since October 2008, according to a Bloomberg News survey of producers and analysts.
“We are not comfortable with oil prices where they are today,” al-Falih said. “We’re concerned about the impact it could have on the global economic growth.”
Oil has rallied 32 percent in New York since protests against Libyan leader Muammar Qaddafi began Feb. 15, cutting the country’s oil production and fueling speculation Middle East supplies will be disrupted. The conflict in the North African nation is the bloodiest in a series of uprisings that has unseated the presidents of Tunisia and Egypt and spread to Syria and Yemen. Futures yesterday traded at $113.48 a barrel, the highest since Sept. 22, 2008.
Saudi Arabia raised its crude output to offset lost production in Libya and has developed two new blends to help meet the demand of European refiners that use Libyan grades. Both countries are part of the 12-member Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil.
Oil consumers needn’t be concerned by high crude prices because spare capacity can “moderate” the market, said al-Falih, who is in South Korea for a board meeting this week.
Saudi Oil Minister Ali al-Naimi “has made it clear that the kingdom will continue to act in support of oil market stability,” al-Falih said. The minister on April 19 described the recent gains in prices as “unjustified.”