Saudis Promise Extra Production Again

Stuart Staniford:

In a rather breathless top-of-website story, the FT's Guy Chazan writes:

Saudi Arabia’s powerful oil minister, Ali Naimi, made a rare intervention into overheating oil markets on Tuesday, declaring that high oil prices were “unjustified” and vowing that the kingdom would boost its output by as much as 25 per cent if necessary.

Mr Chazan must not have been paying attention or he would know that Mr al-Naimi trying to cause the supply and demand curves for oil to intersect at a different place by jawboning them is a regular feature of the oil world.  It usually has a rather small effect on the price that lasts a day or two.  The thing that would actually affect prices, pumping more oil, he always rejects on the same tired grounds:

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.

 So if the Saudis can just turn on the spigot, why don't they ever?  Considering how expensive tar sands production is, it would seem like the Saudis producing over 2 million more barrels a day would make a big difference, especially since all the additional oil production in North Dakota only amounts to 600,000 barrels a day.  The Saudi oil minister is blowing smoke.