ALI NAIMI, Saudi Arabia’s powerful oil minister, made a rare public intervention yesterday, declaring that high oil prices were “unjustified” and vowing that the kingdom would boost output by as much as 25 per cent if necessary.

As the west’s stand-off with Iran intensifies, oil prices have rallied this month to a post-2008 peak of $128 a barrel, with markets braced for European Union sanctions on Iranian crude that could knock out a chunk of global supply.

Speaking to reporters in the Qatari capital Doha, Mr Naimi said he wanted to “dispel this pessimism in the market” and the widespread fear that the world could see a repeat of 2008’s price rise that was a harbinger of the global recession.

“I think high prices are unjustified today [on] a supply-demand basis,” he said. “We really don’t understand why the prices are behaving the way they are.”

Supply was “much more firm today than in 2008” when crude rose to $147 a barrel, he said, with global supply now exceeding demand by 1-2 million barrels a day. Saudi Arabia had 2.5 million b/d of additional production capacity, which it could bring online if necessary, he said. The kingdom was likely to be producing about 9.9 million b/d of oil in April and exporting roughly 7.5 million to 8 million b/d of that, he said.

Asked if it could ease prices by exporting more oil, he said customers were not asking for additional crude. “We are ready and willing to put more oil on the market, but you need a buyer,” he said.

Many oil market watchers believe that if Saudi Arabia’s actions prove unsuccessful in cooling the market, the US could attempt to bring down prices by releasing strategic oil reserves. US officials have repeatedly said they are considering such a measure. – (Copyright The Financial Times Limited 2012)