Saudi minister: OPEC nations have capacity to produce surplus oil (but..)


(CNN) — Seeking to alleviate concern about rising oil prices, Saudi Arabia’s oil minister said his country and other OPEC members have the capacity to produce surplus oil, Saudi Press Agency reported.

Saudi Arabia alone has a surplus of about 4 million barrels per day, the agency quoted Minister Ali al-Naimi as saying.

It was not clear from the news agency’s report whether al-Naimi meant that Saudi Arabia is already producing an extra 4 million barrels or that it can, if the need arises.

On Tuesday, 87 countries — including Saudi Arabia — signed a charter to limit price fluctuations and stabilize the market.

The move came as oil prices jumped 6%. Prices spiked as high as $98 a barrel earlier in the session, as the crisis in Libya sparked concern that the turmoil roiling the Middle East could spread to other producing countries — including Saudi Arabia.

“Now it’s starting to look like the entire region’s on fire, and it looks like it could spread to other parts of the region,” said Peter Beutel, oil analyst with energy risk management firm Cameron Hanover. “This thing is getting worse and worse and worse, and it could spread to Saudi Arabia, and that’s the big fear.”

The article continues at CNN

But WikiLeaks suggest the Saudis cannot deliver enough to keep the lid on prices

From the Guardian [UK]: WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

US diplomat convinced by Saudi expert that reserves of world’s biggest oil exporter have been overstated by nearly 40%

The US fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand…

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