|With the world's largest oi reserves, Saudi Arabia acts as a swing producer [GALLO/GETTY]
Saudi Arabia has increased oil production to compensate for the fall in output from Libya, as the popular uprising against the regime of Muammar Gaddafi continues to grow in that North African country.
The increase of 700,000 barrels per day is occurring under the attentive gaze of the rest of the members of the Organisation of Petroleum Exporting Countries (OPEC) -- to which both Saudi Arabia and Libya belong -- but with no intervention from the cartel.
Saudi Arabia "is playing the role assigned by the global economy: being the number one guarantor of stability on the oil market," Elie Habalián, a former Venezuelan governor at OPEC and expert on Middle East issues, said.
The measure helped curb the escalation of prices. West Texas Intermediate (WTI), the US benchmark grade, sold for between 97.36 and 97.48 dollars a barrel in New York Friday, down from 103.41 dollars Thursday.
In London, North Sea Brent, the European benchmark, traded at $112.14 dollars a barrel Friday, down from a peak of 119.79 dollars Thursday.
The week's averages stood at 92.64 dollars a barrel (compared to 79.52 dollars in 2010) for WTI, 107.33 dollars (80.24 in 2010) for Brent, and 104.11 dollars (77.39 in 2010) for the OPEC reference basket, the Venezuelan Energy Ministry reported Friday.
Speculators are taking advantage of the turmoil in the Middle East to turn a quick profit, "which neither producers nor consumers want," warned Carlos Mendoza, another former Venezuelan governor to OPEC.
A conference of more than 80 representatives of energy ministries from oil producer and consumer countries, held this week in Riyadh, the Saudi capital, agreed to work for price stability.
Like other analysts, Habalián insists that the current crisis is manageable, and that "even the total loss of Libya's output on the market, just over 1.5 million barrels per day, can be recovered from."
Reports indicate that crude oil shipments from Libya's ports and terminals have almost come to a halt.
"Only Saudi Arabia has four million barrels per day in spare capacity," said Habalián.Saudi Arabia was producing nearly 8.4 million bpd in December.
Maintaining that level of spare capacity -- Kuwait and the United Arab Emirates also have spare capacity -- must cost a fortune, said Habalián, who added that it was a cost that Saudi Arabia assumes to remain the arbiter of the market.
A report by Energy Intelligence, a New York-based industry publication, said Thursday that Saudi Arabia had not announced the increase in output publicly, "most likely because of the political sensitivities in the region and the internal dynamics of OPEC."
The oil cartel, made up of Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela, agreed in late 2008 to cut the supply target by 4.2 bpd, to 24.5 million bpd, with tolerance of up to two million bpd.
Venezuelan Energy Minister Rafael Ramírez said that for now, OPEC has no plans to gather ahead of the ordinary June meeting to discuss the crisis in Libya, "because international sales remain stable.
"The big consumers have large stockpiles. There is a great deal of oil stockpiled; I don't think there will be a shortage of supplies," Ramírez said.
The US Department of Energy reported crude oil stockpiles of 346.7 million bpd as of Feb. 18, 9.2 million bpd more than a year earlier.
The International Energy Agency (IEA), which represents industrial consumer countries, reported that OECD (Organisation for Economic Cooperation and Development) oil stocks were equivalent to 57.5 days of demand in December, a week over the critical threshold of 50 days of consumption.
Before the uprising in Libya broke out, the anti-government protests in the Arab world had mainly affected non-OPEC countries -- Tunisia, Egypt, Yemen, Jordan, Bahrain. But if they continue to spread, and cause instability in major oil producers, the unrest would inevitably affect the global energy market and oil policy.
But this scenario is not yet on the horizon, according to Habalián. In the case of Algeria, which produces 1.2 million bpd, the army has such a tight grip on the country that lengthy unrest affecting oil exports is unlikely.
Even in Libya itself, either Gaddafi or any government that might replace him would need to get production and exports going again to run the country.
In the event of a popular uprising in Saudi Arabia, the market would definitely be upset, but Habalián said that was improbable.
He noted, for example, that the Shia minority opposition to the ruling Sunni royal family is small, demands for democracy are timid, and the king has adopted prevention policies, such as the recent announcement of 37 billion dollars in additional spending on social programmes.
A version of this article first appeared on the Inter Press Service News Agency.