January 16th, 2012
02:02 PM GMT
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Dhahran, Saudi Arabia (CNN) – With 260 billion barrels of oil, Saudi Arabia has more than double the proven reserves of Iran, its nearest competitor within OPEC.

In an interview in Dhahran, in the Kingdom’s Eastern Provence, the veteran energy minister Ali Al Naimi said the country is ready step back in as the swing oil producer if sanctions undermine Iran’s exports of 2.2 million barrels a day.

“We have the capacity to produce 12.5 (million barrels a day) and we are idling now between 9.4 and 9.8. So we have substantial spare capacity,” he said.

Naimi also suggested it could happen much faster than the market was anticipating. “I believe we can easily get up to 11.4, 11.8 almost immediately, in a few days. Because all we need is to turn valves. Now to get to the next 700 (thousand) or so, we probably need about 90 days.”

The CNN interview took place after Saudi Arabia signed a third joint venture, with Sinopec of China, to supply 400 thousand barrels a day from Saudi’s west coast port of Yanbu by 2014.

That refinery on the Red Sea will avoid tanker passage through the Strait of Hormuz, which Iran has threatened to close if Europe and the United States intensify sanctions.

Naimi said that half of the nearly ten million barrels a day pass through the Strait but it has options to divert more crude via pipelines to Red Sea facilities. He was however sceptical that Iran could close the vital sea lane for a sustained period of time.

“I personally do not believe that the Strait, if it were shut, will be shut for any length of time. The world cannot stand for that.”

This view was shared by the Secretary General of the United Nations, Ban Ki Moon during a CNN interview in Abu Dhabi Monday. He said the important transport artery needs to be protected and that Iran must abide by the international laws of the sea.

Saudi officials, speaking on background, said it was a country’s sovereign right to protect the interest of its customers and to stabilise the market. The comments preceded Iran’s warning that if other producers from the Gulf came in to replace crude on the market “these countries would be the main culprits of whatever happens in the region,” said Iranian OPEC Governor Mohammad Ali Khatibi.

Saudi Arabia and others within OPEC express concerns that a spike in prices could undermine demand, which is the scenario that played out in the second half of 2008. Oil peaked at $147 in July 2008 only to cascade down to the mid-$30 level by December of that year.

Naimi believes that with added production from the Kingdom and others in the region such as Kuwait and the United Arab Emirates, keeping prices near where they are today can be defended.“Our wish and hope is we can stabilize this oil price and keep it at a level around $100.”

That is a departure from its target two years ago of $75-$80 a barrel, but one that he says producers and consumers can live with in today’s climate.

soundoff (22 Responses)
  1. Steve Thompson

    Here is a look at how much oil Iran is capable of producing and who have been the beneficiaries of their production:


    Iran is also sitting on the world's second largest natural gas reserves and owns a portion of the world's largest natural gas field, a field that, if converted to oil equivalent, is by a wide margin the largest hydrocarbon-producing field in the world.

    January 16, 2012 at 6:44 pm |
  2. Ha

    Iran exports most of its oil to China, I doubt China would allow this.

    January 17, 2012 at 1:08 am |
  3. Daniel

    Very Good. Let's drain the pockets of Iranians so that they can start putting down that horrible regime.

    January 17, 2012 at 8:21 am |
  4. bw

    oh you silly hillbilly boy...you know nothing about Iran and yet talk nonsense..And know twice sh1t about Saudis..where women can not drive where two weeks ago was women senteced to DEATH for WITCHCRAFT..know nothing about that experts said their oil supplies are dropping yet their leader said its lie and called expert idiots..YOU KNOW SH1T..start minding your own bussiness

    January 17, 2012 at 9:40 am |
  5. themanfrommars

    And now can be told, the SAUDI only intention from the start is to push the US, Israel and western allies to destroy Iran at any means.

    January 17, 2012 at 12:13 pm |
  6. g

    doesnt matter the price will still rise

    January 17, 2012 at 5:01 pm |
  7. moj

    i hate arab

    January 17, 2012 at 5:41 pm |
  8. W

    China just signed a deal with the Saudia's for oil...oopps sorry Iran hope that doesn't cost you much.

    January 17, 2012 at 6:42 pm |

    The damn Saudis have doblecroos our ideals, our nature, our people, our lands
    let´s get that land back to the real and honest Arabs, get rid of the Saudis
    soon before it´s too late ...

    January 17, 2012 at 7:38 pm |
  10. Selvam

    Why this kollaveri Saudi di?
    You r the people who must join hands with brothers to make sitiuate cool,
    Why ariban nations fear about the western? not for curde, they have inverested they black out money with weastern,

    Yesterday its happened to IRAQ, today is happening to IRAN which is area in Big of having CRUDE to trade in Dollar, Tomorrow is to happen for Saudi Arbia, No belive in western hands

    I want to why and country try to become developing nation US, UK & europe will object, if the Nuclear project in IRAN is supplied by US what will there do,
    Live than to live in Peace,

    Dont coment any things you can open a valve from 9.8 to 12.8 millon bpd

    This is wrong way in Arabia,
    Be unit and work unit are one day u will be distory by other

    Thanks Selvam

    January 18, 2012 at 10:51 am |
  11. eman

    View moments fishing owl in the pitch


    January 27, 2012 at 12:38 am |
  12. brad

    TO SELVAM: WHAT???????? that made no sense!!!

    February 7, 2012 at 9:55 pm |
  13. ibrad

    Help Canada build this pipeline and drill all we can in America for now. Then lets really work on Solar,Thermal anything else and tell the WHOLE middle east to go Phuck themselves.

    February 8, 2012 at 1:19 am |
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