[2008-01-16]  We’ll Go by Market Demand
US President George W. Bush yesterday called on Saudi Arabia to help contain rising oil prices.

“I would hope, as OPEC considers different production levels, that they understand that if their — one of their biggest consumers’ economy suffers — it will mean less purchases, less oil and gas sold,” he said on the second day of his visit to the Kingdom.

The US president had earlier mentioned that he intended to raise his concerns about high oil prices face-to-face with Custodian of the Two Holy Mosques King Abdullah at the king’s ranch in Janadriya, near Riyadh.

“OPEC should understand that if they can put more supply on the market it will be helpful,” Bush told reporters when asked what the oil group could do to alleviate high oil prices. “I will say to His Majesty that high energy prices can affect economic growth because it’s painful for our consumers. It could cause the US economy to slow down,” he said.

Responding to Bush’s calls hours later, Petroleum and Mineral Resources Minister Ali Al-Naimi said: “We will raise production when the market justifies it, this is our policy... We as a producing country look to maintain the fundamentals of the oil market as healthy as possible.”

While saying Saudi Arabia does not wish to see any country go through stagnation or recession, Al-Naimi said oil prices were not the only cause of such misfortune. “Presidents and kings have every right, every privilege to comment or ask or say whatever they want. The concern for the US economy is valid, but what affects the economy is more than the impact of oil,” he said.

“Concerns about the US economic growth are valid. But the US economy is more than just the price of oil,” Al-Naimi said. “OPEC is not the only influence... Non-OPEC countries are also producing oil.”

Al-Naimi declined to say if OPEC, the source of a third of the world’s oil, would raise output at its Feb. 1 meeting in Vienna. OPEC has repeatedly said it is pumping enough crude and blames speculation, a weak dollar and geopolitical tensions — such as fears of war with Iran — for record high oil prices.

Al-Naimi said the Kingdom had two million barrels per day in spare output capacity and was working hard to ensure the market was well supplied and balanced. He said Saudi Arabia was spending $90 billion to expand oil, gas and petrochemical capacity over the next five years.

French President Nicolas Sarkozy, who is also touring the Gulf, said in Riyadh on Monday that oil should be closer to $70 per barrel than the current price of being above $90. Sarkozy too urged Saudi Arabia to use its influence to moderate prices.

Meanwhile, Bush again warned Tehran of serious consequences if Iranian vessels confronted US war ships in the Gulf, but said he had told GCC leaders he wanted to solve the standoff over Iran’s atomic program diplomatically.

“If they hit our ships, we will hold Iran responsible,” Bush said. “They’d better be careful and not be provocative.”

Iran has denied US accounts of a naval incident in which Washington says Iranian vessels threatened three US ships in the Strait of Hormuz.

Bush said he had faced questions from Gulf leaders about whether last month’s US intelligence report, which said Iran stopped an active nuclear program in 2003, signaled a lessening of resolve against Tehran. He said he assured them that Washington remained committed and that “they (Iran) are still a threat.”

Riyadh has called for restraint in the standoff between Tehran and Washington.


Source: Arab News