Mr Bush voiced concerns this week about Saudi Arabian production and the country’s ability to increase output in the event of a severe supply disruption. His comments are the most vocal since he became president, and mark a departure from protocol by a US president about the world’s biggest oil exporter, and former special friend.
In previous meetings between the two countries the subject of oil has been officially off the agenda even though Saudi Arabia is one of the biggest oil exporters to the US.
Ali Naimi, who as Saudi Arabia’s energy minister is the voice of the Kingdom’s oil policy, said Saudi Arabia was not responsible for the oil price. The US benchmark crude oil price, West Texas Intermediate has only momentarily dipped below $50 a barrel in the past two months.
“Saudi Arabia has a tremendous amount of reserves, we are exploiting them very successfully,” Mr Naimi said after a speech to an oil conference in Paris. The Kingdom has proven oil reserves of 261bn barrels or about a quarter of global oil reserves.
Mr Naimi said Saudi Arabia has the highest production capacity in the world of 11m barrels a day, and the highest spare capacity of 1.5m b/d and plans to add a further 1.5m b/d in production capacity by the end of 2009. Global oil demand is expected to increase by at least 6m b/d over this time period.
These production and capacity figures are often recited by the minister, and may do little to appease Mr Bush.
Analysts said Mr Bush suggested the possibility of launching an inquiry into Saudi reserves ahead of the publication later in the spring by Matthew Simmons, a US investment banker with close links to the Republican Party, which questions Saudi Arabia’s reserves based on published geological reports.
Dr Adnan Shihab-Eldin, acting secretary general for the Organisation of the Petroleum Exporting Countries, said the Opec members subject to quotas, which does not include Iraq, was producing about 27.7m barrels a day at present, and planned to increase to 28m b/d by the end of the month, which would be 500,000 b/d above the prevailing official ceiling. Including Iraq, Opec output is currently 29.5m b/d.