OPEC kingpin Saudi Arabia will step in to cover any potential shortage arising from Russian-Ukraine tensions, Saudi Oil Minister Ali al-Naimi reportedly said on 12 May.
The minister also said the Organization of the Petroleum Exporting Countries should maintain its current output cap of30 million barrels per day when it comes up forreview atthe oil cartel’s next meeting inJune. “Supply is highly sufficient, demand is great andthe market is fairly stable,” Naimi said in Seoul. “There is no reason fora change - absolutely no reason.”
Saudi Arabia has in the past two years played the leading role in cushioning against supply disruptions from Libya, Nigeria, Iraq and South Sudan. Production from Libya, the holder of Africa’s largest crude reserves, has dropped more than 80% since the start of the uprising against Muammar Qaddafi in 2011.
Russia, whose output has almost doubled over the past 15 years to more than Saudi Arabia’s, has always produced at full capacity.
Meanwhile, increasing output in the United States due to the shale boom has prompted politicians across the Atlantic to call for an end to the era of dependence on Middle East oil and the naval protection of sea routes in the region.
But Saudi Arabia reiterated its unique supply role, saying it would compensate potential oil shortages caused by the crisis in Ukraine. “We are willing to supply any shortage which may arise,” Naimi said. He said the kingdom’s current output is around 9.6 million barrels per day, while it has a capacity of 12.5 million barrels per day.
OPEC producers Iran and Iraq are also eager to boost production after sanctions are lifted and security is restored respectively. But the Saudi minister ruled out any plans for Saudi Arabia to adjust output to make way for others. “People like our oil - why reduce?” he said, when asked if the kingdom would cut production to accommodate rising output from other producers.
Oil traders have remained nervous, following Russia’s annexation of Ukraine’s Crimean peninsula and violence in eastern Ukraine. Unofficial referendums were organised by pro-Russian groups in parts of Ukraine's eastern regions of Donetsk and Luhansk could spark more violence.
But Naimi said the current global oil price of $100 a barrel is the fair price “for everybody, consumer, producer, and oil companies”. Benchmark
On 12 May, New York's main contract, West Texas Intermediate (WTI) was up nine cents to $100.08 for June delivery in mid-morning Asian trading, while Brent North Sea crude for June gained 32 cents to $108.21 per barrel.
In March, OPEC said world oil demand will increase more than expected in 2014, raising its prediction for a second straight month as US and European economic growth increased.
In a monthly report, OPEC said global demand will rise by 1.14 million barrels per day this year, up 50,000 barrels per day from its previous forecast. It also boosted its 2014 projection for global demand for OPEC’s crude to 29.7 barrels per day, up 100,000 barrels per day from the previous month’s report.
http://www.neurope.eu/article/saudi-arabia%E2%80%99s-oil-fill-russia-void