Saudi Arabia is ready to pump nearly 10 million barrels per day of oil for the rest of this year year to try to calm record prices, a meeting of Opec countries in Jeddah heard today.
"I am convinced that the supply and demand balances and crude oil production levels are not the primary drivers of the current market situation and that markets are already well-supplied," Saudi Arabian Oil Minister Ali al-Naimi said in a speech.
US Secretary of Energy Samuel Bodman listens to Saudi King Abdullah speak during the opening ceremony of the Jeddah Energy Meeting today Photo: Reuters
"But ... I also strongly believe that each of us must do what we can to alleviate these difficult conditions".
Saudi Arabia has already said it will produce 9.7 million barrels per day in July, marking an increase in output of 550,000 bpd since May.
Mr Naimi said the kingdom would pump at or above that level for the rest of the year if there was demand from its customers.
"For the remainder of this year, Saudi Arabia is prepared and willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July," Mr Naimi the meeting of oil producer and consumer countries.
For the longer term, Naimi said Saudi Arabia could increase its available capacity by an extra 2.5 million bpd above a current plan to reach 12.5 million bpd by the end of next year.
"We have identified a series of future crude oil mega-increments totalling another 2.5 million barrels per day of capacity that could be built if and when crude oil demand warrant their development," Mr Naimi said.
Saudi Arabia called the unprecedented meeting of producers and consumers in response to record moves on the oil market.
Oil prices have hit a peak of nearly $140 a barrel and rose by almost $11 in a single trading session early this month, a jump Mr Naimi said was driven by factors other than supply and demand.
"A simplistic focus on supply expansion is therefore unlikely to tame the current price behaviour," he said.
Apart from the short-term supply-demand balance, investors have bought into futures markets because they believe oil supplies will be under strain for the foreseeable future.
Mr Naimi said such long-term fears were "badly misplaced" and that the world had enough oil resources to meet demand for "many, many decades to come".
The minister also said Saudi Arabia would invest $129 billion in the energy sector in the next five years, spanning the upstream and downstream sectors both at home and abroad.