Maria: Welcome back to the ‘Closing Bell’. I'm Maria Bartiromo. Thanks for being with us this afternoon. In an attempt to ease the rising price of oil, Saudi Arabia would raise production capacity by 5%. Saudi Arabia is the world's largest exporter of oil. Adel Al-Jubeir is here with us. He is here with an outlook for crude oil. Nice to have you with us. Welcome.
Adel: Thank you.
Maria: I saw you were there waiting in Washington remote for us while we were talking about the presidential election with Todd Buchholz and Gene Sperling. What's your opinion, if any, who would the royal family like to see in the White House, Bush or Kerry?
Adel: Whoever the American people decide to vote for. We have had strong ties to the Bush family as we have to every president going back to Roosevelt.
Adel: The relationship is strong, we cooperate in a lot of areas. We are looking for peace and security in the Middle East and we do it irrespective of who is in the White House.
Maria: How has that relationship changed?
Adel: I believe the relationship has been tested. We are much more open with each other and look at each other, deal with each other in a frank way. We assess our interests in an objective way and we work together closely in a lot of areas that previously cooperation might not have been so great in.
Maria: One of which is oil. What is behind the move in prices?
Adel: We believe a lot of the increase is a function of speculation, a fear factor, political risk. We believe there is concern about instability in the Middle East and as a consequence, buyers have been going long. We do not see a physical shortage of crude oil. We believe there are adequate supplies in the market. We are ready to bring on more supplies, but we haven't seen customers lining up to ask for more crude oil.
Maria: You said a lot of things there. You said there is fear factor and you do not believe there is a shortage of oil. If there is no shortage of oil, why are the Saudis willing to produce more oil and if you don't see a shortage of oil, perhaps the price is where it should be at fifty dollars a barrel?
Adel: We believe fifty dollars a barrel is clearly way too high. We have had a policy of making sure we have a 2 million-barrel cushion for extra capacity should there be a shortage in the world. We now have a cushion of million and a half barrels. We are increasing our capacity further to make sure it remains [indecipherable] …… We believe that $25 is the most optimum.
Maria: Between 22 and 28, we haven't seen that price if a long time. That is been two years, a year and a half?
Adel: Correct. The basket for OPEC prices is about four dollars less than the WTO price. A market price of thirty dollars would translate into 26, 25 or 26 for the OPEC basket. But in any case, fifty dollars is clearly too high. Forty dollars is clearly too high. We are hoping that as people realize that the oil fields are not in danger, there is not a shortage of physical supply of crude oil, that the fear factor will come down and with it the price of oil.
Maria: How would you characterize what's happening in Iraq right now? Are things, the war on terrorism, as you expected?
Adel: Well, I believe the situation in Iraq is of grave concern for Saudi Arabia as it is for the rest of the world. We are hoping that the U.S. will be able to work with the Iraqis and achieve security which will benefit all of the Iraqi people as well as the neighborhood.
With regard to the war on terrorism, we believe the world is making great progress. Many countries who had been too relaxed about terrorism are now being very vigilant in fighting terrorism. We have al-Qaeda on the run, we have their leaders in jail; we know how they operate better. We still have a long way to go, but we are winning this war.
Maria: After the siege in Russia, the Crowned Prince was said to have called Putin and promised greater support on the war on terrorism. Tell us exactly what kind of support is he talking about?
Adel: When the Crown Prince spoke with President Putin, he called to offer condolences and also to express his outrage at what happened. We have strong ties with Russia. We cooperate with Russia, including in the war on terrorism. It cannot be fought by Saudi Arabia and the United States alone. It has to be an international effort. That said, that's where the world is moving towards.
Maria: Are you worried about a disruption to the fields in Saudi Arabia?
Adel: We prepare for the worst and hope for the best. But the oil fields are very, very secure. There are redundancies built into it, we do not believe that an attack against the oil fields, a terrorist attack that would disrupt production in Saudi Arabia, is realistic.
Maria: Good to talk to you today. We appreciate it. Thank you.