Nicosia, Jun 18: The news that Saudi Arabia has told the UN Secretary General Ban Ki-moon that it will increase its crude output to 9.7 million barrels a day (b/d) in an effort to bring down prices, was welcomed by some OPEC members, while others said that it would not tame prices.
The increase by 200.000 b/d would take Saudi crude output to its highest monthly rate since August 1981, according to US government data. Last month, the Kingdom also raised production by 300,000 b/d. Kuwaiti Finance Minister Mustafa Al-Shimali on Tuesday backed Saudi Arabia, saying prices were too high and energy costs were restricting growth and adding to inflationary pressure. "A reasonable oil price would be more or less $100," he said.
As expected, Iran, Iraq and Libya, who are generally regarded as price hawks, said they had doubts that the rise in output would have a significant impact on crude prices. They expressed the view that the market was well supplied and speculation was the real reason for high prices.
"The current rise in oil prices is not due to shortage in the market," Hojjatollah Ghanimifard, international affairs director of the National Iranian Oil Company, told journalists. At this point, adding 100,000, 200,000, 300,000, 400,000 and even 500,000 bpd will not create a balance in prices."
Iraq's Oil Minister Hussein Al-Shahristani said he was certain that oil prices were being driven by speculation and said regulators needed to step in to stabilise oil markets.
Libya on Tuesday also reiterated that supply was not the reason for rising prices and questioned whether others in OPEC were able to add more oil.