Top oil exporter Saudi Arabia sought to soothe fears about high oil prices, saying on Tuesday world supplies were well in excess of demand and that $125-a-barrel crude prices were not justified given the anemic state of the world economy.
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Saudi Oil Minister Ali al-Naimi said the kingdom had satisfied all of its customers' requests for oil and stood ready to raise output to full capacity of 12.5 million barrels per day (bpd), if needed.
"I want to assure you that there is no shortage of supply in the market," Naimi told reporters at a press briefing in Doha, Qatar. "We are ready and willing to put more oil on the market, but you need a buyer."
Oil is trading above $123, just $24 short of an all-time high, as tighter Western sanctions on Iran threaten to slow the country's exports.
"Oil prices today are unjustifiable on a supply and demand basis," said Naimi. "We really don't understand why the prices are behaving the way they are."
He said supply of oil was now out-pacing demand by more than 1 million bpd and that customers were not asking for extra crude.
"From our point of view, we have had no customer not satisfied. We have satisfied every request for every customer that has come asking," said Naimi.
"We ask the customers, 'Do you need more?' and invariably the answer is 'No thank you.'"
Riyadh is now pumping 9.9 million bpd - the highest in decades - and is willing to produce at full capacity of 12.5 million bpd immediately, should demand warrant, Naimi said. He said he expected output next month to stay at 9.9 million bpd.
Saudi spare production capacity now stands at 2.5 million bpd, he said.
"We spent a lot of money building that capacity. We finished building it in 2009, and it is there to be used," said Naimi.
Storage inside the kingdom was full and Riyadh was holding about 10 million barrels outside of Saudi Arabia in Rotterdam, Sidi Kerir and Okinawa, he said.
"Our inventories both in Saudi Arabia and worldwide are full." (Reporting by Amena Bakr, editing by Jane Baird)