Neil: Saudi Arabia says it will pump more oil into the market to bring prices down. But lots of questions today - if the Saudis even have the extra oil to pump? Joining us now from Washington is Adel Al-Jubeir, foreign affairs advisor to the Saudi Crown Prince. Good to have you, thanks for coming.
Adel: Thank you, Neil. Always a pleasure.
Neil: You seem to be doing all you can to open the spigot but it seems to be doing very little. What is going on?
Adel: Well, we think that there are forces beyond our control, speculation, concerns, fears, political risk factors that impact on the price of oil. We don't believe there is a shortage in supply. And we are ready to produce an additional million barrels if we need to, to ensure there are adequate supplies.
Neil: What if we are cutting it too close and demand is finally eclipsing supply - that is the problem?
Adel: We have a policy of always maintaining a cushion of spare capacity inside Saudi Arabia for things such as this and we're engaging in a program of increasing our spare capacity to factor in -- increases in demand in the future.
Neil: Are you worried that - maybe you are losing that edge, you are losing the influence that - despite our best efforts - and your country, to be fair, has been churning out a lot of oil - but we have been using a lot of oil, and those are the new [indecipherable] that indicate maybe OPEC can't control this?
Adel: You are correct in terms of increase in demand beyond people's expectations but we are pumping a lot of resources into increasing capacity. We still have a cushion of about a million to a million and a half barrels that is available. There are several hundred thousand barrels of extra capacity by other producers. We don't believe there is going to be a shortage of supply, a physical supply, we believe that what is driving this is speculation and fears in the market as well as concerns about political risk.
Neil: What do you mean by - the fear factor? I agree with you that it is probably a large chunk of what we see going on. I’ve heard estimates as high as maybe $10 is built into the fear factor, that left to the basic druthers here of the market we’d be looking at maybe $38, $39 oil. What do you say?
Adel: I think you are correct. We are - our estimates are between $5 and $10 a barrel for the fear factor and people look at the situation in Iraq and see pipelines being blown up and assume it will happen in other places and put a premium on it, and people see terrorists attacking in Saudi Arabia, and they fear the oil fields are in danger, which they are not, and that causes them to go long in their position and puts pressure on the prices, and they see hurricanes in the Caribbean and assume it affects production there or refining capacity and that also puts upward pressure on prices.
Neil: Are you worried about a PR backlash against your country - people who might not be that schooled on issues like supply and demand might attack your country and say it is the Saudis’ fault?
Adel: Well, we are always worried about a PR backlash, but the reality is we are the world's largest producer and exporter of oil, the country that possesses the largest reserves, and we have a responsibility to maintain balance between supply and demand, which we take very seriously. Our policy over the last 30 years has been to make sure there are no shortages and make sure if there are, we use our capacity to take care of the shortages, and that is what we have been doing. We are doing everything we can to make sure there are adequate supplies of crude oil as we speak; and we've informed our customers, should they require more production, we are willing and happy to supply them. So I think that if there is a backlash against Saudi Arabia it would not be one based on fact nor would it be a fair one.
Neil: But it is a political season in this country - as I’m sure you are aware, the democratic candidate John Kerry said if he were elected President he'd start reassessing the relationship not so much junking it but demanding more of the Saudis, and its commitment not only to the fight on terror, but to helping us on the energy front, so do you have a horse in this race?
Adel: We really don't have a horse in this race, we deal with every administration, every President, regardless of their political party or affiliation. We have very strong ties with the Bush family as we have with the Clinton family and every other President going back to President Roosevelt. Our countries are allies; our countries cooperate and work closely together in the war against terrorism and for peace and stability in the Middle East, and it is vital that this cooperation continue, if we want to win the war on terrorism.
Neil: Is there someone you slightly favor?
Adel: This is really up to the American people, whoever the American people choose as their leader, that is who we deal with.
Neil: Diplomatic to the end.
Adel: We have no choice.
Neil: Thank you very much.