Speculators ramp up oil price says Saudi
Madrid, July 4, 2008
Record oil prices above $145 a barrel are being driven by speculative cash pouring into the oil market, Saudi Oil Minister Ali al-Naimi said.
The oil minister of the world's biggest exporter said demand and supply were less at play in the market, and the jump in oil prices was affecting the world economy.
A nearly 50 percent rise in the oil price since the start of the year has fed inflation at a time the global economy is reeling from the credit crunch and slowing economic growth.
"A great amount of financial resources have gone into the oil market, which is causing this uplift in prices," Naimi told reporters on the sidelines of the World Petroleum Congress in Madrid on Thursday.
Riyadh has persistently sought to calm fears about supplies and last month promised to raise its output to 9.7 million barrels per day (bpd) in July to cool the market. It has increased output by 550,000 bpd since May.
Asked if the kingdom was prepared to pump still more, he said: "Where is the customer. If there is a customer, the answer is yes. If there is no customer, the answer is no. Somebody has to buy the oil," he said.
Earlier, in a speech Naimi said theories that world oil supplies had peaked had fanned fears in the oil market, and said a lot of those theories were wrong.
"Informed studies of the resource base tell us there is plenty of recoverable oil left in the ground, perhaps as much as 5-7 trillion barrels," he said, adding that significant quantities of oil remained undiscovered.
"The limits to future petroleum supplies have more to do with politics than with geology and resource availability."
Oil jumped to a fresh record above $145 a barrel earlier on Thursday, extending a multi-year bull run propelled by a combination of a weak U.S. dollar and lower U.S. crude stocks.
Tensions between Israel and major oil producer Iran have led to fears of further disruptions.
Speculation about a possible attack on Iran because of its nuclear program has risen since a report last month said Israel had carried out such a strike.
The head of Iran's Revolutionary Guards said in remarks published last week that Tehran would impose controls on shipping in the Gulf and the strategic Strait of Hormuz if it was attacked.
Asked if there were other export routes if shipping through the Gulf was closed, Naimi said: "I do not deal in conjecture. That is a big assumption and it is invalid."
He also refused to say how much higher the price of oil could go. "If I knew that, I'd be in Las Vegas."-Reuters