As oil surged to records near $120 a barrel on worries of export disruptions from Nigerian rebel attacks and concerns – a Scottish refinery strike could hit North Sea production, causing shortages in the market ; Saudi Arabia warned on Tuesday that the biggest threat to the future security of oil supplies is the lack of spare production capacity worldwide.
In unusually frank remarks, according to FT – Ali Naimi, the kingdom’s oil minister, admitted: “Limited capacity along the entire supply chain is the real source of current global supply tightness and represents the greatest threat to ensuring adequate energy to fuel future economic growth.
William Ramsay, deputy director of the International Energy Agency, which represents the world’s biggest oil consuming countries, agreed, warning: “Potential to expand production within Opec: there is none, except in Saudi Arabia. So we put on Saudi Arabia the sole responsibility.”
Saudi Arabia has been aggressively investing in its oilfields, with the help of international service companies, although the country has kept the exploitation of its oilfields in the hands of Saudi Aramco, the national oil company.
Mr Naimi said producers were “working hard” to add capacity, while Abdalla Salem el-Badri, Opec’s secretary general, reiterated that the group planned to spend $160bn over the next four years to increase oil production capacity by 5m barrels per day.
Shokri Ghanem, head of Libya’s national oil corporation, admitted there was little more oil the Organisation of the Petroleum Exporting Countries could pump in case of a shortfall. “Very little can be done by anyone, there is not enough spare capacity to help,” he said.
The fact that Saudis had to emphasise there was no need to panic about high oil prices, was a clear sign to many just how uncertain the future looked.