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, a Saudi Arabian oil official said.
There is no reason for oil prices to rise because Saudi Arabia and Organization of the Petroleum Exporting Countries (OPEC) won’t allow shortages to exist, the official said by telephone today, declining to be identified by name.
As OPEC’s statute indicates, it is the responsibility of the group to ensure that the market is well balanced and that there is no shortage of supply, the official said.
Exporters are under pressure to ensure adequate supplies to the market after violence in Libya, Africa’s third-largest producer, sent Brent crude oil futures in London to as high as $119.79 a barrel earlier today, the highest since August 2008. Brent retreated below $116 after the Saudi official’s comments were reported.
Some West African oil which goes to Asian markets can be redirected to Europe, and extra Saudi oil can go to Asia to replace the West African supplies, the official said. OPEC’s West African members are Nigeria and Angola.
OPEC collectively pumped 29.4 million barrels a day last month, according to Bloomberg estimates, and has about 5 million barrels a day of spare capacity, according to the International Energy Agency. Most of the unused capacity is in Saudi Arabia, the organisation’s biggest producer.
Companies leave Libya
Eni, the largest foreign oil producer in Libya, and several other foreign oil companies said they were curtailing production and evacuating staff after violent clashes between soldiers and anti-government protestors in the past few days.
OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.
Saudi oil can flow through the kingdom’s East-West pipeline, reducing the time to reach European refineries, the official said. The line goes from the kingdom’s eastern province to the Red Sea port of Yanbu and can hold as much as 5 million barrels a day for export to European markets, according to a US Energy Information Administration website.
