The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, according to confidential cables from its embassy in Riyadh.
The cables, the latest released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40 percent.
The revelation in the cables, which date between 2007-09, comes as oil prices have soared in recent weeks to more than 100 dollars a barrel on global demand and tensions in the Middle East.
Many analysts have suggested that the Saudis and their OPEC petroleum producing partners could pump more oil if rising prices threatened to choke off demand.
But in November 2007, former head of exploration at the Saudi oil monopoly Aramco, Sadad al-Husseini, was said to have told the US consul general in Riyadh that its 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.
Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit "peak oil," Husseini is quoted saying in extracts of the cables published by the Guardian Wednesday.
He said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment and Aramco had badly underestimated the time needed to bring new oil on tap.
According to al-Husseini, "the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described,†one cable said.
Seven months later, the US embassy in Riyadh went further in questioning “how much the Saudis can now substantively influence the crude markets over the long term.â€
“Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period," a cable warned. - pna
Linkback:
https://tubagbohol.mikeligalig.com/index.php?topic=37660.0
