NEW YORK – Top world oil exporter Saudi Arabia vowed Wednesday to raise supplies to meet any extra energy demand, but concerns about exports from Iraq and Russian oil company Yukos (search) kept worldwide crude prices near record highs.
Saudi Oil Minister Ali al-Naimi (search) said the kingdom had pumped 9.3 million barrels per day (bpd) of crude during the past three months in a bid to cool world oil prices and added the country could immediately tap spare production capacity of more than 1.3 million bpd if needed.
The Saudi comments briefly drove crude futures sharply lower, although prices later reversed course and ended four pennies below their all-time high as the controversy surrounding Russian oil giant Yukos weighed on traders' minds.
Concerns about supply tightness were reinforced by a report showing U.S. inventories of crude shrank last week and announcements from oil companies that they were abandoning facilities in the Gulf of Mexico due to a tropical storm.
After dropping as low as $43.30 per barrel, light crude for September delivery settled at $44.80, up 28 cents on the New York Mercantile Exchange (search). On London's International Petroleum Exchange, Brent crude futures closed at $41.57, up 29 cents.
Naimi said that in addition to the 9.3 million of crude, Saudi was also pumping 700,000 bpd of light condensates and gas liquids. Those extra volumes are not counted under OPEC quota restrictions.
Naimi's statement said demand for Saudi crude in September would be "more than 9.3 million barrels daily and it will be met in full with no exclusions or reductions."
"If they were hoping to break the back of the rally with just that, it's not going to come to fruition," said John Kilduff, senior vice president of the energy risk management group at Fimat USA Inc. "There are just too many uncertainties regarding supply."
Russia's biggest oil exporter Yukos continues to battle bankruptcy, trying to avoid a disruption to its daily operations and export sales, a threat that has helped push up oil prices.
Russia's Federal Energy Agency said on Wednesday it will ask court bailiffs to unblock Yukos' frozen accounts, worried that exports could be cut if it cannot access cash.
Yukos produces roughly 1.7 million barrels per day, or about 2 percent of total global output.
Ed Silliere, vice president of risk management at Energy Merchant LLC in New York, said Naimi's comments would have had more impact but for the ongoing brouhaha surrounding Yukos.
"That is the key factor in the market right now," he said.
Traders also are getting increasingly concerned about a capacity crunch among members of the Organization of the Petroleum Exporting Countries (search).
The International Energy Agency (search), in its monthly oil market report, said OPEC's sustainable spare production capacity shrank to 600,000 barrels a day in July as the cartel raised output to try to contain prices.
"The thin margin of spare capacity held by OPEC producers has contributed to recent price strength," said the IEA, adviser on energy to 26 industrialised nations.
The IEA figures would mean a buffer of less than one percent on the 82-million-bpd world market, compared to about eight percent in 2002 when spare capacity in OPEC was 6-7 million bpd.
In the United States, oil companies shut some oil and gas production in the U.S. Gulf and evacuated 1,700 workers as a precaution against Tropical Storm Bonnie. The shut-ins amounted to 180,000 bpd of oil and 500 million cubic feet per day of natural gas.
U.S. government weekly crude inventory data to August 6 showed an unexpected drop of 4.3 million barrels, but stocks of 294 million barrels are 10 million higher than at the same time last year.
In other Nymex trading, gasoline futures rose 2.73 cents to $1.2622 per gallon, while heating oil futures were essentially unchanged at $1.1706 per gallon.
Natural gas for September delivery fell 17.7 cents to $5.614 per 1,000 cubic feet.
Reuters and the Associated Press contributed to this report.