Saudi-controlled Arabia has vowed to ensure world oil supplies will remain plentiful, in light of Opec's decision to cut output. "We will not allow shortages in the market," said Prince Bandar bin Sultan, the Saudi Ambassador to the US, after meeting President George W Bush.
Opec reduced production - by one million barrels per day - in order to provoke an orderly easing in prices. The oil cartel reckons that prices are heading back to $25-28 per barrel, well within its target range. At present, oil prices are still well above that target: US crude oil is currently trading around $35 per barrel. But Opec is convinced that the current highs are speculative, and not indicative of any genuine strength in the market. Saudi Foreign Minister Prince Saud al-Faisal says there is a fundamental oversupply of oil, something that would eventually take its toll in the form of a sharp fall in prices. Stocks of oil in the US, the world's biggest importer of crude, are at a 19-month high. US investors have stockpiled oil in response to the current tense security situation, but most analysts expect the buying to come to a halt soon.
| Which is why the price is so high. No, wait ... |
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