DAVOS-Saudi oil minister says no shortage of oil

www.forbes.com Reuters, 01.25.03, 3:16 AM ET

DAVOS, Switzerland, Jan 25 (Reuters) - Saudi Oil Minister Ali Naimi said on Saturday there was no shortage of oil in the market despite fears of war in Iraq and there were no grounds for prices to be as high as they now are.

"There is no shortage in the market and there should be no reason for prices where they are today," Naimi told a panel discussion at the World Economic Forum annual meeting in the Swiss ski resort of Davos. "That is speculation. Those are perceptions (of a shortage)."

He said oil prices would be above $40 a barrel now if Saudi Arabia had not maintained spare capacity of around three million or 3.5 million barrels per day.

OPEC aims to keep prices for a basket of its crude in a $22-$28 range and has just raised production quotas by seven percent to 1.5 million barrels a day effective February 1.

Prices have topped that range to hit two-year highs this week amid fears of a U.S.-led war in Iraq and due to a general strike that has cut exports from OPEC member Venezuela.