VIENNA, 31 March 2004 — The high price of gasoline in the United States is not due to a lack of oil on the world market, Saudi Arabian Minister of Petroleum and Mineral Resources Ali Al-Naimi said yesterday, insisting that OPEC would maintain a one million barrel per day (bpd) production cut.
“As far as Saudi Arabia is concerned, (the) April 1 (cut) has been implemented,” Naimi told reporters while he was exercising with a morning jog in Vienna, where the 11-nation Organization of Petroleum Exporting Countries is to meet today. It was still unclear, however, if OPEC would carry out the full planned reduction, which had been decided at a meeting Feb. 10 in Algiers.
Oil traders said that although Saudi Arabia was already slashing production deliveries, other OPEC members have been slow to follow suit.
United Arab Emirates (UAE) Oil Minister Obeid ibn Saif Al-Nassiri said in remarks published yesterday that OPEC had not ruled out delaying its output reduction.
“Different ideas, including delaying the enforcement of the Algeria decision, will be studied,” when OPEC meets, Nassiri told the Al-Hayat newspaper in Abu Dhabi. But Naimi said, “the supply of oil has nothing to do with the price of gasoline in the United States,” referring to low gasoline, rather than crude oil, inventories in the United States. The 10 nations in OPEC’s quota system decided on Feb. 10 to reduce their total crude oil production from 24.5 million barrels per day (bpd) to 23.5 million barrels with effect from April 1, which is now two days away. Iraq does not participate in the quota system.
OPEC is worried about crude oil prices falling when world demand slumps in the spring. But OPEC is under pressure from the United States to postpone its cut, with crude prices near 13-year highs.
US gasoline prices near their historic highs are already an issue in political bickering between US President George W. Bush and his Democratic rival John Kerry.
In addition to the one-million-barrel per day reduction from the production quota, OPEC had committed itself in February to remove 1.5 million bpd of excess production by the end of March, bringing the total agreed decrease to 2.5 million bpd. “We want a stable price. We don’t want our economy to be hurt and we don’t want the economies of others to be hurt,” Naimi said.
“Throwing oil on the market is destructive for the international oil industry,” he said, adding that he thought there was currently a surplus of oil even if there was a shortage of some types of oil like light sweet crude.
