Saudi Minister Says OPEC Could Fill Oil Production Gap Caused by Iraq War, Calls Price Too High
abcnews.go.com The Associated Press DAVOS, Switzerland Jan. 25 —
Saudi Arabia's oil minister said Saturday that his country and OPEC could make up for any interruption in oil supplies from a war in Iraq, adding the price of oil had been driven too high "by all these drums of war."
Oil Minister Ali Naimi said history showed that producers had been able cover disruptions such as the current seven-week strike that reduced supplies from Venezuela.
"Although I admit there is a perception of a threat to supply, producers and consumers are working to mitigate the threat," Naimi said at a panel discussion at the World Economic Forum in Davos.
"There is no reason for the price of oil to be as high as it is today."
Naimi said suppliers from the Organization of Petroleum Exporting Countries oil cartel had stepped into the gap during past Gulf upheavals that temporarily reduced deliveries, including the 1979 Iranian revolution, the Iran-Iraq war in the 1980s, and the 1991 Gulf war.
He pointed to Saudi Arabia's policy of holding significant production capacity of 3 million barrels a day in reserve.
"No matter what we say, no matter what we do, there are always doubts whether we will deliver," Naimi said. "But history is on our side."
He said fears of a U.S. attack on Iraq had driven prices, currently over $33 a barrel, to an excessive level, despite OPEC efforts to produce more oil in response to the disruption in Venezuela.
"Did we bring the price back to $25?" he said. "We didn't, because there are all these drums of war."
OPEC's president, Qatar's Oil Minister Abdullah bin Hamad al-Attiyah, agreed, saying "there is no shortage of oil." He said OPEC may even face an oil surplus when its members next meet in March.
OPEC decided Jan. 12 to raise its output ceiling by 1.5 million barrels a day, effective Feb. 1.
Oil market participants fear Iraq may destroy its oil production facilities in case of an attack by the United States. Iraq is the fourth-largest exporter in OPEC, producing 2.5 million barrels a day in January.
March oil futures jumped $1.03 to $33.28 a barrel on the New York Mercantile Exchange on Friday.