Current oil prices are too high due to geopolitical concerns even though supplies are plentiful, Saudi Arabia's ambassador to the United States said on Tuesday.
"We do believe prices are too high," Prince Turki Al-Faisal said at a news conference hosted by the US Energy Association. "The markets are being well-supplied." Al-Faisal declined to indicate what price range was more acceptable to the kingdom, but said up to $30 a barrel of the current price was attributable to concerns over Middle East supply security and market speculation.
Al-Faisal reiterated the kingdom's plan to hold 1.5 million barrels per day to 2 million bpd of surplus capacity available over the long term. Saudi Arabia has about 500,000 bpd of heavy oil that it has been unable to sell to its customers, indicating that global demand for oil is soft, he said.
"Supply side there is a lot of oil on the market," Al-Faisal said. "Crude oil is available and abundant. It's the products that are in short supply." Saudi Arabia, the world's top exporter, produces about 12.5 percent of the world's oil and is Opec's top exporter. The kingdom plans to spend $50 billion to boost output capacity by 1.5 million barrels per day (bpd) to 12.5 million bpd by 2009.