Oil prices to stay high, upping output won’t help: Saudi Arabia

July 1st, 2008 - 7:00 pm ICT by IANS  

Dubai, July 1 (IANS) Increasing production will not pull down spiralling oil prices and indications are that prices will remain high, according to Saudi Arabia’s King Abdullah Bin Abdulaziz Al-Saud. “People who think that oil prices will go down once production is raised are wrong because there are indications that prices will remain high,” King Abdullah said in an interview to Kuwaiti daily Arab Times.

“As an oil producing country, we are not linked to such indications or observations. We market our products in the international community based on the current prices, whether high or low,” he added.

Asserting that Saudi Arabia had nothing to do with speculation in oil prices, he said: “Worldwide development is in the offing, hence, there is a growing demand for oil.”

The Saudi monarch’s comments came just over a week after a meeting of oil producing and consuming countries Saudi Arabia had convened in Jeddah to discuss the skyrocketing oil prices.

Answering a question on the results of the Jeddah meeting, he said: “The oil consuming and producing countries should look into the issue (of rising oil prices) to identify the real cause.”

He said it was wrong to blame the Organization of Petroleum Exporting Countries (Opec) for the current trend in world oil prices.

“Opec used to have full control over the price of oil but many consuming countries opposed it, arguing the price should be based on the law of demand and supply, to which, Opec agreed. Still, some groups are accusing the organization of causing the increase in the prices of oil… Is this fair?”

Citing reports by experts, King Abdullah said the only way prices can go down was through finding of an alternative source of energy.

“…But the price of that (alternative) energy will also increase due to the booming world economy. Prices will continue to soar as the economy flourishes because energy is vital to development. Thanks to the Almighty, our region has a strong oil reserve that can meet future demands,” he said.

He, however, expressed optimism that the current crisis could be ended through cooperation between the world’s powerful economies.

“In the end, I believe that through cooperation between the big economies in the world, we will overcome the current crisis. The consuming countries should adopt the prices and treat the issue in a fair manner,” he said.

To a question on security in the Gulf region, he said he hoped that events like Iraqi invasion of Kuwait in the early 90s would not be repeated.

“People in the Gulf, in general, and in the Kingdom (of Saudi Arabai), in particular, don’t want the recurrence of the problems that Kuwait encountered several years ago,” the ruler of the Gulf’s largest nation said.

His comments came even as there were reports that Kuwait was taking precautionary measures to ensure smooth oil flow in the event of Iran sealing the vital Strait of Hormuz.

Quoting experts and officials, the state-run Kuwait News Agency (KUNA) said oil prices could hit $200 per barrel “in case the Gulf region witnessed dramatic developments”.

The report said the soaring world oil prices were largely due to the ongoing war of words and sabre rattling between Iran and Israel over Tehran’s nuclear issue.

While Israel has threatened military strikes to destroy Iran’s nuclear facilities, Iran has threatened to seal the Strait of Hormuz through which the bulk of the region’s oil exports pass.

In the interview to the newspaper, the Saudi ruler also said that his country was taking several steps to crack down on terrorist groups.

“Strong coordination between security departments and the citizens have led the Kingdom to prosperity and safety. This cooperation resulted in a successful crackdown on terrorist groups as well as those who were brainwashed by these groups,” he said.

He also observed that security authorities foiled attempts to carry out terrorist attacks through people’s cooperation.

“In the last three years, the Kingdom has received a number of terrorist threats which all ended with the terrorists losing the battle. Saudis played a crucial role as they cooperated with the security authorities to reveal the real identity of the terrorists,” he said.

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