Qatar, Saudi Arabia — ESI-AFRICA.COM — 25 February 2011 – Saudi Arabia and other OPEC nations, including those in West Africa, are willing and able to replace any lost Libyan oil as soon as companies ask for it, including crude of the same quality, according to a Saudi Arabian oil official.
“There is no reason for oil prices to rise because Saudi Arabia and OPEC won’t allow shortages to exist,” the official said by telephone, declining to be identified by name. “Some West African oil that goes to Asian markets can be redirected to Europe, and extra Saudi oil can go to Asia to replace Nigerian or Angolan supplies,” the Saudi official added.
Exporters are under pressure to ensure adequate supplies to the market after violence in Libya, Africa’s third-largest producer, sent Brent crude futures in London as high as US$119.79 a barrel, the highest since August 2008. Brent retreated below US$114 after the Saudi official’s comments were reported.
Several hours later, the International Energy Agency (IEA) said it stood ready to release emergency stockpiles if needed.
“The market is looking at the Saudi and IEA statements as declarations of intent, which isn’t the same as actually putting physical production on the market,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London. “The market is now focusing on the potential of lost barrels, not only in Libya but Algeria, and the possibility of protests elsewhere that could easily lead to tightening supply.”
“As OPEC’s statute indicates, it has a responsibility to ensure that the market is well balanced and that there is no shortage of supply,” the Saudi official said.