Saudi oil minister says market oversupplied and cuts output

Reuters News
Posted: Apr 17, 2011 10:35 AM
Saudi oil minister says market oversupplied and cuts output

By Amena Bakr and Reem Shamseddine

KUWAIT (Reuters) - Saudi Arabia Oil Minister Ali al-Naimi said on Sunday the world oil market was oversupplied and that the kingdom had reduced production in March due to weak crude demand.

Oil consumers have urged OPEC to quickly add supply to the market to quell the rally in crude prices that has taken oil to its highest level in two and a half years amid unrest in North Africa and the Middle East.

Other OPEC ministers have insisted the market is well supplied and there is nothing the group can do to stop prices from going higher while there is not unmet demand for crude.

"The market is overbalanced... Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied," Naimi told reporters.

OPEC will meet to discuss production policy in June.

Naimi declined to comment on the current price of crude but said Saudi production "may be higher" in April than in March.

A Reuters survey estimated Saudi Arabia produced 9 million bpd in March, up from 8.65 million bpd in February.

Two Saudi-based industry sources told Reuters last week the kingdom had cut production by 500,000 barrels per day (bpd) in response to weak demand.

Oil prices slipped early last week after Goldman Sachs analysts warned high oil prices may be eroding demand but rebounded on signs of renewed health in the U.S. economy on Friday.

Saudi Arabia and some other OPEC members unilaterally boosted oil production after the uprising in Libya shut down the bulk of the North African OPEC member's oil industry.

Naimi confirmed Saudi Arabia had sold 2 million barrels of its so-called special blend that state oil company Saudi Aramco produced as a substitute for Libyan crude oil that was lost to the market due to the Libyan unrest but market sources say demand for the blend has been muted.

(Reporting by Amena Bakr and Reem Shamseddine; Writing by Robert Campbell; Editing by Mike Nesbit)