Minister of Petroleum and Mineral Resources Ali Ibn Ibrahim Al-Naimi, on his return from the 103rd ministerial conference of the Oil Producing and Exporting Countries (OPEC) held in Jakarta, Indonesia last week, today stated that Saudi Arabia's policies on oil and industry are in line with the directives of Custodian of the Two Holy Mosques King Fahd Ibn Abdul Aziz and center on two clear goals for the present and future benefit of the Kingdom.
The first goal is to achieve the highest possible return from oil, while avoiding any negative impact that increasing Saudi Arabia's share in the international oil market would cause. The Kingdom's aim is to maintain a balance, so that an increase in its share will not affect prices, and an increase in price will not affect its share.
The second goal is the stability of the international oil market and continuity of oil as a basic source for energy. The Kingdom's oil reserves are around 260 billion barrels, with room for increase, and can last for another hundred years.
Underlining the need to balance oil supply and demand on the one hand, and on the other, price stability so that there is no question of opting for energy alternatives or reducing consumption of oil, Minister Al-Naimi affirmed that OPEC's latest resolution, to increase the official OPEC ceiling of oil production to 27.5 mbd, will help to bring about such stability, revealing that OPEC's actual production up to the end of the month of October 1997 ranged between 27.2 and 27.5 million barrels a day (mbd), although the official sale is estimated to be 25.3 mbd. The international oil market can assimilate this quantity of oil with the continued acceptable price level, free from any build-up of large quantities of trade reserves.
Referring to the meeting of economic experts from the OPEC countries that took place on November 12, two weeks prior to the ministerial conference, Minister Al-Naimi said that it was projected that the demand for OPEC oil would exceed 27 mbd, and that Saudi Arabia agreed with this projection. He went on to stress that agreement to raise the ceiling was reached, after serious discussion and in a brotherly atmosphere, with unanimity, adding that there are a number of unpredictable factors that will affect oil prices in the near future. One of them is the quantity of oil to be exported by Iraq according to the agreement with the United Nations. Another is the uncertainty of how cold the coming winter will be in the northern hemisphere, and therefore how high the demand for oil. Nevertheless, Minister Al-Naimi expressed optimism that prices will continue at their current level, or improve further, if all OPEC countries abide by their fixed quotas of production.