He wrote, “[i]t is clear that sustained high prices are starting to take their toll on European economic growth targets. They are contributing to trade balance deficits and feeding inflationary pressures. It is an unsatisfactory situation and one Saudi Arabia is keen to help address.”
In attempting to maintain partiality, Naimi attempted to calm any potential market panic by underlining that Organization of the Petroleum Exporting Countries (OPEC) members, including Libya, Iraq, and Angola, have taken positive strides to increase crude output.
“So the story is one of plenty. Supply is not the problem, and it has not been a problem in the recent past. There is no rational reason why oil prices are continuing to remain at these high levels,” he wrote.
Despite the Saudi kingdom's claims that it is able to increase production to allow others to maintain reserves, no increase has occurred.In a recent market comment, Olivier Jakob at Petromatrix said that the market giant has so far maintained its current level of production. "The world needs proof of barrels, not words, and Saudi Arabia for now is delivering the latter rather than the former," he said. The situation is one that goes beyond the countries investigating the potential release of strategic reserves; the International Energy Agency (IEA) confirmed last week that it is closely monitoring market developments. In a statement, IEA Executive Director Maria van der Hoeven noted that prices at the pump have hit record highs in some countries and that the IEA "is concerned by the impact of these high prices while the global economic recovery remains fragile.” Politically motivated Some political analysts have labelled the reserves debate as politically motivated. Record-level fuel prices in both the US and France have prompted debate between presidential candidates ahead of national elections. While French Prime Minister Francois Fillon has said that there is a "good chance" that the IEA will allow reserves to be drawn on, Washington has made it clear that no decisions have yet been made. "I will say, as I have said repeatedly, that this option is on the table, but no decisions have been made and no specific actions have been proposed," said White House spokesman Jay Carney. "It's outrageous," said Phil Flynn from PFGBEST. "It's done purely for political purposes." While many feel that a move by Saudi Arabia to increase production could have a more long-lasting effect than that of the release of reserves, legal hurdles will need to be overcome.