Saudi Arabian oil minister Ali al-Naimi has said that his country would be willing to supply more crude oil to the market if escalating tensions between Russia and Ukraine cause a supply shortage.
Russia’s military intervention on Ukraine’s Crimean peninsula and its aftermath in eastern Ukraine have rattled oil markets for the last few months, keeping benchmark Brent futures near $108 a barrel after hitting $112.39 on March 3, the highest this year.
“We are willing to supply any shortage which may arise,” Naimi said. He said the kingdom’s current output is around 9.6 million bpd, while it has a capacity of 12.5 million bpd.
Saudi Arabia produced 9.66 million bpd of crude in April, up from 9.566 million bpd in March, an industry source familiar with the matter said. It supplied 9.650 million bpd to the market, up from 9.533 million bpd in March.
Potentially adding to the tensions over the breakaway efforts in eastern Ukraine, pro-Moscow rebels declared a resounding victory in a Sunday referendum on self-rule.
Concern over the situation helped support oil markets on Monday. Brent gained 33 cents to $108.22 a barrel by 0406 GMT, while U.S. crude was 11 cents higher at $100.10.
Speaking on the sidelines of a conference in Seoul, Naimi also said $100 a barrel was a fair price for oil.
“One-hundred dollars is a fair price for everybody – consumers, producers, oil companies,” he said. “It’s a fair price. It’s a good price.”
The minister also said the Organization of the Petroleum Exporting Countries (OPEC) should maintain its current 30 million barrel-per-day (bpd) output cap when it comes up for review at the producer group’s next meeting in June.
“Supply is highly sufficient, demand is great and the market is fairly stable,” Naimi said.
“There is no reason for a change. Absolutely no reason.”
At the next OPEC meeting on June 11 a new deal may be reached over the production cap to account for rapidly rising oil output in the United States and a number of OPEC members aiming to restore full output after sanctions and civil strife.
Iran and Iraq – OPEC’s No.2 and No.3 producers – both feel they are special cases because of production lost to sanctions – Iraq over decades under Saddam Hussein up to 2003 and Iran over the past two years for its nuclear programme.
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