Saudi Arabia, the world’s biggest oil exporter, is not happy with current crude prices and is determined to see lower levels, Oil Minister Ali al-Naimi said.
The kingdom is working toward its goal of seeing prices drop by highlighting there’s no shortage of supply, al-Naimi said in a statement in Seoul today. Stockpiles held by consumer nations are rising and Saudi Arabia is producing 10 million barrels a day, he said. That’s close to the fastest rate in at least 31 years, official data shows.
“We are seeing a prolonged period of high oil prices,” al-Naimi said. “We are not happy about it.” Fundamentally, the oil market remains balanced and there is no lack of supply, he said.
Benchmark Brent oil futures have risen 13 percent this year on concern tension over Iran’s nuclear program will disrupt exports from the Middle East. The contract for May settlement on the ICE Futures Europe exchange was at $121.19 a barrel today. Inventories in the U.S., the world’s largest oil consumer, have climbed to 365.2 million barrels, the highest for this time of year since 1990, an Energy Department report this week showed.
“Inventories in Saudi Arabia and around the world are full,” al-Naimi said, reiterating remarks he made last month in Doha. “Our Rotterdam inventory is full, our Sidi Kerir facility is full, our Okinawa facility is full.”
Global oil markets are better supplied for the first time since 2009, the International Energy Agency, the energy adviser to the Organization for Economic Cooperation and Development, said in its monthly report yesterday.
Saudi Arabia has invested “a great deal” to sustain its production capability and will use spare capacity to meet any additional required volumes, said al-Naimi. The country has the ability to produce 12.5 million barrels a day, he said.
“The story is one of plenty,” said the minister. “Supply is not the problem.”
U.S. oil prices may fall next week on speculation negotiations between Iran and world powers over the Persian Gulf nation’s nuclear program will reduce tension, a Bloomberg News survey of 33 analysts and traders showed.
Brent futures traded above $128 a barrel last month as Iran threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s crude, in retaliation against international sanctions. The European Union plans to ban the transportation, purchase, financing and insurance of Iranian oil from July 1.
“Saudi Arabia does not control the price,” al-Naimi said. “It sells its crude oil according to international prices.”
Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, pumped 3.39 million barrels a day in March, according to a Bloomberg survey of producers and analysts. That’s the slowest rate since June 2002.
Other OPEC members, such as Libya, Iraq and Angola, are taking “positive strides forward” in increasing output, according to al-Naimi. The group has 12 members.
Supplies are coming on stream from Canada and the U.S., he said. Shipments are also being contributed from Russia, South America, Kazakhstan and Azerbaijan.