Kuwait supports Saudis, says oil over $100 too high

19 June 2008

Kuwait has decided to support Saudi Arabia, saying that current crude oil prices are too high. In an interview Kuwait finance minister Mustafa Al-Shimali said that a  reasonable price of oil would be "more or less $100.'' Kuwait's finance minister said he would like to see these prices drop, in tandem with the prices of of ''goods we import.''

Crude oil for July delivery settled at $134.01 per barrel on the New York Mercantile Exchange, down from its record high touched yesterday at $139.89. Saudi Arabia is the world's largest oil exporter, and has said that record oil prices were "unjustified''. It has proposed a meeting on 22 June at Jeddah, inviting producers and consumers to help stabilise prices, and has announced that it will increase oil output by 200,000 barrels per day next month.

Oil prices have fallen 2.7 per cent since last week when Saudi oil minister Ali al-Naimi started to organise the meeting between producers, industrial consuming nations and banks. State-owned oil firm Saudi Aramco has also announced on 13 June that it will soon start oil production from its 500,000 barrel-a-day Khursaniyah field that has seen delays since December 2007. 

Saudi Arabia will produce 9.7 million barrels of crude per day from next month, representing around 450,000 barrel-a-day increase on its production figures from May 2008.

Estimates indicate that for every $1 increase in oil prices, Kuwait would make around $79 million each month, while Saudi Arabia would add around $295 million per month to its treasury. 

The Organisation of Petroleum Exporting Countries (OPEC) do not have an official price target for crude oil, though officials from its 13 member nations have reiterated that prices are too high. Iran, OPEC's second-largest producer, has objections to production increases by Saudi Arabia without prior talks with OPEC members.