Crown Prince Abdullah's Foreign Affairs Advisor Adel Al-Jubeir was interviewed on May 25, 2004 by Todd Benjamin of CNN International's 'World Business Tonight', concerning the current oil situation.
TODD BENJAMIN, host: Oil prices dipped after Saudi Arabia upped the ante by calling on OPEC to lift production by more than two million barrels a day. Previously they asked for quotas to be increased by 1 1/2 million barrels a day. OPEC will discuss the situation at an informal meeting in Amsterdam on Saturday. Oil prices reached 21-year record highs earlier in the week.
Now, in New York Nymex is currently trading at $39.82 per barrel for July delivery while in London, Brent Crude closed at $36.44 a barrel. OPEC ministers admit they have little power to calm the market. They say security concerns and heavy speculation by investment hedge funds are driving the price scare. OPEC won't make a final decision on quotas until it meets in Beirut on June 3rd.
Well, joining me on the line now to discuss this is Adel Al-Jubeir, the foreign affairs advisor to the Crown Prince of Saudi Arabia. First of all, sir, why up the ante to two million barrels a day? Will that really make much difference?
Mr. ADEL AL-JUBEIR (Foreign Affairs Advisor, Saudi Arabia): We hope so. We have looked at the … [word unclear]...supply-demand picture and we believe that increasing the quota by two million barrels will help bring down prices to the more moderate levels that all the OPEC countries are aiming for.
BENJAMIN: Well, your target is $22 to $28 a barrel. None of the oil analysts I speak to expect it to go there, and they also add that even if you were to increase production by more than two million barrels a day, OPEC is cheating by over two million barrels a day. So basically it's awash even though it will send a psychological signal to the markets. And furthermore, when Saudi Arabia first called for an increase in production a week ago Monday of one and a half barrels a day, the oil markets ignored the call and the price of oil went to record levels. So does-- do you really believe this can have that much difference?
Mr. AL-JUBEIR: We hope so. But you have to keep in mind, Todd, that there are four factors that are driving the price of oil up and the level of crude oil. Number one is that there are massive positions by hedge funds that have gone long on oil that have put upward pressure on prices. Number two is the geopolitical situation where there is a lot of concern about stability and security of supply, which is also driving the price of crude oil higher than it should be. Number three, you have bottlenecks at the refining level and at the distribution within certain countries, in particular in the US, which is driving up the price for gasoline which is, in turn, is lifting the price of crude oil. Number four, you have an increase in the demand for crude oil on the international market, and we believe that by increasing production we will be able to meet the demand. We will be able to supply sufficient crude to the world markets to help bring down prices to a more moderate level. We have also made clear ...
BENJAMIN: As you're well aware …...
Mr. AL-JUBEIR: Sorry. As I was saying with regards to your question about is there going to be more oil available, we have made it clear to our customers that we will make at least 9 million barrels available for them during the month of June and that we will be willing to satisfy any other requirements that they have for further crude.
BENJAMIN: As you're well aware, high gasoline prices -- record gasoline prices in the US is a hot political issue with the presidential election coming up this November. It's causing problems for the Bush Administration. It's no secret the Saudi Royal Family has very close ties to the Bush family. You know, some skeptics might say the reason you're doing this, in part, is not only to relieve the oil markets but to help George Bush out in his political campaign. How do you respond to that?
Mr. AL-JUBEIR: I think that that's absolutely incorrect. Saudi Arabia's policy in terms of seeking moderate prices for crude oil has been consistent for the past 30 years, and our actions have been consistent over the past three --30 years in what we have done to ensure that prices remain at moderate levels. When prices tend to go too high we take action to bring them down, irrespective of who's in the White House. That's number one. And number two, with regards to the closeness between the Bush family and the Saudi Royal Family, that shouldn't be a surprise to anyone. Every American president has been very close to Saudi Arabia from the time of President Roosevelt onwards, whether they were Democrat or Republican.
BENJAMIN: Adel Al-Jubeir, thank you so much for joining us, and your thoughts.