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Saudi Oil Min Blasts High Prices, Offers No Action

Source: Reuters 3/28/2012, Location: Middle East

Saudi Oil Minister Ali al-Naimi blasted "irrationally" high oil prices in a rare opinion piece in the Financial Times, but offered no sign that the kingdom was moving to boost output.

Naimi largely reiterated comments he made a week ago, saying there was no shortage of supply but that Saudi Arabia remained ready to use its spare production capacity "to supply the oil market with any additional required volumes."

"Supply is not the problem, and it has not been a problem in the recent past. There is no rational reason why oil prices are continuing to remain at these high levels," he wrote in the op-ed, published on the FT's website.

Oil is trading near $124 a barrel, in part due to concerns about Iran's exports amid tightening sanctions.

"I hope by speaking out on the issue that our intentions - and capabilities - are clear. We want to see stronger European growth and realize that reasonable crude oil prices are key to this."

Naimi wrote of Riyadh's responsibility as the world's top exporter to "do what it can to mitigate prices." "The bottom line is that Saudi Arabia would like to see a lower price," he said.

The influential Saudi oil minister identified $100 a barrel as an ideal price for producers and consumers earlier this year.

Political tension and concerns about supply disruption were fuelling oil's rally, he said.

"It is the perceived potential shortage of oil keeping prices high - not the reality on the ground," he said. "There is no lack of supply. There is no demand which cannot be met."

Naimi said last week the kingdom was pumping 9.9 million barrels per day - the highest output in decades - and was willing to produce at full capacity of 12.5 million bpd, if needed.

He restated the message and described Saudi output capacity as "a reliable buffer against any temporary loss of production."

"This is not empty rhetoric," he said. "The story is one of plenty."

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