Minister of Petroleum and Mineral Resources Ali Al-Naimi, in his keynote speech today at the sixth international oil conference in Paris, addressed the issue of the Kingdom's efforts to stabilize supplies and prices in the global oil market. The oil market, he said, is currently affected by a number of factors that include economics, speculation, and globalization. He affirmed that Saudi Arabia is focusing on maintaining its oil reserves and raising its production capacity, as well as monitoring price levels.
Minister Al-Naimi pointed out that the Kingdom's oil reserves have increased in spite of the amount used up over the years, and even more is estimated to exist, in proven as well as unexplored areas, accessible with new technology. Given the current rate of production of 9.5 barrels per day, the Kingdom’s oil reserves, he said, will last for at least 80 years. At the moment, Saudi Arabia’s production capacity is 11 million bpd; this is crude oil alone, and does not include natural gas liquids and condensates. The Kingdom plans, however, to increase this by some 3 million bpd over the period 2004 to 2009, and predicts an eventual capacity of 15 million bpd.
Petroleum prices, Minister Al-Naimi pointed out, are, and have always been, fixed according to market mechanisms. One of the factors that affect prices is the general oil policy of the Organization of Petroleum Exporting Countries (OPEC). Saudi Arabia’s oil policy is to maintain oil prices at a level agreeable to both producers and consumers. Sometimes, however, market fluctuations are out of the control of the world's biggest suppliers. One factor contributing to the current high prices is that oil prices in international trade do not reflect the interaction between supply and demand, since the world's leading bourses, which determine oil future prices, have been widely affected by a number of factors that include storage of crude as well as levels of supply and demand. Other factors are political risks, industrial incidents, turmoil affecting supplies, unexpected changes of demand, problems arising from refining infrastructure, and the positions of oil investors and speculators.
Minister Al-Naimi nevertheless gave assurances that Saudi Arabia will continue its efforts to prevent oil prices from fluctuating, since this creates dangerous situations for both consumers and producers.