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The escalating problems with Iran threatening to disrupt world oil supply, an event that could prove decidedly deadly to the many economies trying to recover from recent recessions. Current economies are built on and around oil so it is in their interests to maintain a constant and secure supply. Saudi Arabia has thankfully come to the rescue and assured us that it will be able to cover any shortages that may arise in the future.
Saudi Arabian Oil Minister, Ali al-Naimi, has guaranteed that due to the continuous investment made by the gulf kingdom into oil production capacity it will be able to meet any future oil market shortages. In fact they could increase output by roughly 2 million bpd "almost immediately".
"It is because of our ongoing investment that Saudi Arabia is able to respond to shortages around the world - take issues with Libyan production last year for example," Naimi said. "And it's because of our investment that any future shortages will be handled."
Some may worry that the rapid growth occurring in Saudi Arabia, which has seen domestic oil consumption rise by more than 5 percent a year between 2003 and 2010 to an average of 2.4 million bpd, will reduce the available supply for export. However, again Naimi promises us that, "Saudi Arabia's domestic growth will not impact on exports now or in the future.”
This is in part due to government investment into oil, and also due to the increasing supply of natural gas that the kingdom is producing, which they intend to use for their own rising domestic energy demands.
In fact so confident is Naimi that he suggests it is not supply that is the worry, but the demand. He said Europe is facing "a difficult time" and it is clear that its economic readjustment will result in falling demand for goods and services, such as oil.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…