Saudi Arabia's oil minister says his country and the oil cartel, OPEC, could make up for any interruption in oil supplies caused by a possible war in Iraq. He told business and political leaders meeting at the World Economic Forum in Davos that the oil price had been driven too high by what he called "the drums of war."
Saudi Oil Minister Ali al-Naimi says there is no shortage of oil on world markets, despite fears of war in Iraq. He said that past disruptions, such as the Iran-Iraq war of the 1980s and Iraq's 1990 invasion of Kuwait and the subsequent Gulf War had shown that producers have been able to provide the world's markets with oil. "Although I admit there is a perception of a threat to supply, producers and consumers are working to mitigate that concern," he said. "And, there is no shortage in the market, and there should be no reason for prices to be where they are today. But that's speculation more about perceptions."
Oil prices have surged, topping OPEC's $22 to $28 a barrel target range, amid fear of a war against Iraq and because a seven-week-old general strike has cut exports from OPEC member Venezuela.
Saudi Oil Minister Naimi said fears of a U.S.-led attack on Iraq had driven prices - now more than $33 a barrel - to an excessive level.
OPEC's president, Qatari Oil Minister Abdullah bin Hamad al-Attiyah, agreed, saying there is no shortage of oil, but that some may be trying to take advantage of war jitters. "Security of supply will be questioned continuously, sometimes in reality, sometimes for business, sometimes for speculations and futures markets," he said. "We will see many people making a lot of profits in the name of security of supply."
Qatari Minister Attiyeh said OPEC may even face an oil surplus when its members meet in March. OPEC decided earlier this month to raise output by 1.5 million barrels a day starting February 1.