Saudi Arabia is concerned about high oil prices and will take steps to moderate them, its oil minister said, in a statement that some in the oil market read as a signal to consumer nations that there is no need to release emergency oil reserves.
"Saudi Arabia is concerned
about rising oil prices in the international oil market. The current high price of oil is simply not supported by market fundamentals," Ali al-Naimi said in the statement on Monday.
"Saudi Arabia will, as always, take all necessary steps to ensure the market is well supplied and to help moderate prices - and we will meet any additional demand from our customers," Naimi said, four days after US administration officials met energy analysts.
The meeting was read by some as a sign that US President Barack Obama is considering tapping US government oil supplies in a bid to bring down fuel prices in the run up to the US presidential elections in November.
The International Energy Agency, which coordinates oil stocks in the West, has been cool on the idea.
The last stock release which followed Opec's acrimonious June 2011 meeting angered Opec officials, who viewed it as meddling in the market and destabilizing for prices.
Brent crude oil prices have surged about 20 percent since Opec last met in June, hovering around $112-$117 a barrel since mid-August. Lower supplies from Iran because of sanctions and outages in the North Sea have outweighed slowing global economic growth.
"The market is well balanced, forward cover remains within an acceptable range and inventories are more than adequate," Naimi said. "We will continue to work in collaboration with other Gulf Cooperation Council nations, and with Opec to defend the stability of the oil market."
Although Naimi did not explicitly blame oil market speculators for the surge in oil prices since June, Gulf Opec oil price doves have in the past blamed financial market speculation when oil prices have spiraled despite increases in supply.
Trading data showed on Friday that money held by hedge funds and other big speculators in commodities has hit a one-year high, with markets rallying in anticipation of US and European economic stimulus efforts.
But Washington may still look to its Strategic Petroleum Reserve (SPR) for relief from stubbornly high oil prices.
"If Saudi Arabia wanted to stop an SPR release, it would have to do more than make a statement like this," oil analyst Olivier Jakob at Swiss consultancy Petromatrix said, adding that talk of releasing oil from the world's largest reserves was piling pressure on Riyadh to do more to dampen prices.
"Saudi Arabia has made a commitment to the G20 to keep oil prices under control. It has always said it will meet the need of customers," Jakob said.
"But if you want to bring prices down, you need to do more than that. You need to push more oil into the market."
Gulf Opec producers have increased their production this year to help make up for lower exports from Iran due to tightening western sanctions over Tehran's disputed nuclear programme.
Although Saudi crude supply to the market remained steady at 9.8 million barrels per day (bpd) in July and August, off multi-decade highs of over 10 million earlier in the year, the big three Gulf Opec producers collectively increased supply by around 400,000 bpd thanks to a 600,000 bpd jump in Kuwaiti production to 3 million bpd.
Saudi Arabia and the United Arab Emirates both cut their production by around 100,000 bpd from July to August, but Saudi Arabia kept supplies to the market unchanged from July by topping that up with crude from in its own vast stocks.
"Naimi could actually be right. Latest data suggest global market will be oversupplied for H2 2012. The EIA sees 450,000 bpd global stock build, IEA 780,000 bpd and Opec 910,000 bpd, that's assuming Opec production of 31.53 million bpd," Tamas Varga, an analyst at brokers PVM Oil Associates in London, said.
"Maybe that's why the kingdom cut production by 100,000 bpd in August."
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