The Minister of Energy Sam Bodman said at a press conference in Jeddah (Saudi Arabia) that high oil prices are primarily caused by insufficient production, not speculation in the market. Saudi Arabia, which is currently the largest oil exporter in the world, can increase production “black gold” to 12.5 million barrels a day by the end of 2009.
Oil doubled in the past year, touching a record $139.89 a barrel on June 16, as investors bought commodities to hedge against a weakening U.S. dollar and concern mounted that demand is growing faster than supply. At least 24 airlines failed this year because of rising costs, while $4 gasoline in the U.S. sparked concern the economy may slip into recession.
The market needs between 3 million and 4 million barrels a day of spare oil production capacity, compared to the 2 million barrels a day currently available, Sam Bodman said.