Crown Prince Sultan, in remarks run by state news agency SPA on Thursday, blamed a price spike that took US crude to $70.85 a barrel on a global shortage of refineries, not the crude to run in them.
“We are concerned about the rise in oil prices and confirm the kingdom’s readiness to do its utmost to compensate for shortages in supply and to meet increasing demand,” Sultan told a US-Saudi business group event held in New York on Wednesday.
“The current rise in oil prices does not stem from a shortage in crude oil supplies but is due to, as everyone knows, increased demand for products and a shortage in refining capacity …,” he said.
British Finance Minister Gordon Brown this week renewed a call for Opec to pump more oil to rein in rising crude prices.
The Organisation of the Petroleum Exporting Countries meets in Vienna next week and its president has said he would propose the group raise its output by 500,000 bpd.
Attiyah doubted a output hike
But Qatari Energy Minister Abdullah al-Attiyah said the proposed hike, viewed by analysts as a goodwill gesture, was unlikely to ease prices and urged consuming states to make it easier to build new refineries to produce more fuel.
“I do not think that this will have an effect,” Qatar’s state news agency QNA quoted him as saying in a radio interview.
“The sharp demand for products is the reason behind the rise and not demand for crude oil,” Attiyah said.
Opec has already raised output by more than four million barrels per day over the past three years and is operating close to full capacity.
Only Saudi Arabia has any significant spare capacity. But much of the kingdom’s extra oil is medium-to-heavy, high-sulphur crude that is harder for refiners to process into light transport fuels.
The closure of US refineries by Hurricane Katrina has also left Opec, and other heavy crude producers such as Mexico and Venezuela, struggling to find homes for those barrels left behind.
Riyadh has said it can boost its output to 11 million bpd if needed. The Opec giant has been pumping around 9.5 million bpd since May.
Riyadh says the high prices are
Opec has struggled to tame a two-year price rally that has doubled crude prices. It blames much of the rise on the world’s
shortage of sophisticated refineries.
Prince Sultan also blamed high prices on natural disasters, in a reference to Hurricane Katrina, security concerns in some producing countries and speculation on oil markets.
Oil prices extended gains above $65 a barrel on Thursday on worries over heating fuel supplies. Prices hit a record above $70 a barrel after Hurricane Katrina shut down some refineries in the US Gulf of Mexico and cut supplies.
“Producing states have and still call on consuming nations, especially the United States and Europe, to facilitate the granting of licences to build more refineries,” Attiyah said.
Saudi Arabia and oil giant Royal Dutch Shell are considering a plan to expand their joint venture refinery in Port Arthur, Texas. The kingdom also plans to build an export-oriented refinery at home.