Saudi committed to OPEC target price range as US law-makers eye price fixing

The Saudi oil minister has committed to providing a steady, stable supply of oil, at the price target range set by OPEC.

Speaking at a Foreign Policy Association panel discussion on U.S.-Saudi Arabian relations, Ali Naimi stated, “We are committed to a price of US$25 for the OPEC basket or a US$22 to US$28 band for the OPEC basket.”

Currently, though, the market price is US$37 per barrel and Ali has lashed out at critics who blame the rising prices on both OPEC and his government.

“[I don’t] know why global oil prices [are] so high, because plenty of crude is available. The [Saudi] kingdom and OPEC [are] not to blame for high oil prices,” said the minister.

“It is not because of a shortage of supply of crude. There is plenty of crude in the market [and] Saudi Arabia would not increase supply to drive down prices,” he added.

As blunt as Ali’s words are, it merely adds fuel to the flame sparked by a statement made by OPEC president Purnomo Yusgiantoro during a news conference. According to Purnomo, “OPEC may raise its target price for crude oil to at least US$32 a barrel.”

“OPEC is studying whether to increase its official target range of US$22 to US$28 a barrel. OPEC’s price index has exceeded US$28 since December [and] the plan may be discussed at the group’s meeting on June 3 in Beirut,” said Purnomo.

“OPEC doesn’t think an increase in the price band will hurt the world economy. OPEC thinks oil at US$32 to US$34 a barrel is considered safe for the world economy,” added Purnomo.

Apparently, the US government does not feel the same way. Last week, the US Senate Judiciary Committee unanimously advanced the No Oil Producing and Exporting Cartels Act, which would allow the US Justice Department and the Federal Trade Commission to bring actions against foreign states for “collusive practices in setting the price or production of oil or oil products”.

The bi-partisan Senate bill, S 2270, was passed by the committee 22 April and will be shortly debated in the Senate.