AP Interview: Saudi foreign minister says oil should be $20 cheaper | VailDaily.com

AP Interview: Saudi foreign minister says oil should be $20 cheaper

Associated Press

WASHINGTON – Saudi Arabia’s foreign minister said Thursday he would like to see the price of oil fall about $20 a barrel, pointing to limited U.S. refining capacity as a reason for soaring gasoline prices.”The oil industry does not suffer from a lack of oil,” Prince Saud al-Faisal said in an interview with The Associated Press.Saud also commented on the political situation in the Middle East, questioning whether the Bush administration’s efforts in Iraq will yield a stable, unified nation.He ruled out diplomatic contacts by his own nation with Israel in the short term, putting him at odds with other Arab and Muslim countries that have reached out to the Israelis following the historic exit of settlers and troops from the Gaza Strip.He said Saudi Arabia had warned the Bush administration before the Iraq war and since about long-term practical problems with its approach to occupation and rebuilding.”It is frustrating of course to see something clearly that is going to happen, and you are not listened to by a friend and some harm comes out of it,” he said. “It hurts.”He did not detail which advice was ignored, but other Saudi officials have said they cautioned the administration about sectarian divisions emerging in Iraq and the dangers of disbanding Saddam Hussein’s army and infrastructure.Saudi Arabia is one of the United States’ closest allies in the Middle East, a vital source of oil and an important military partner and host for U.S. forces.Saud said there is no shortage of oil, and that prices should stabilize at $40 to $45 a barrel. Oil hit $68 on the New York market at one point Wednesday, as refinery capacity was threatened anew by Hurricane Rita.Saud said a big problem with energy markets is a lack of refineries in the United States and elsewhere. He noted that Saudi Arabia had sought to help build a refinery in the United States with no takers. It is building two refineries in Saudi Arabia, he said.”We are adding barrels of oil on the market,” Saud said. “It has no place to go.”The Saudis frequently have blamed America’s high energy prices on a lack of refineries but have not explained why such a shortage would keep crude prices high if there was oil that couldn’t find a refinery.Asked about that, Saud said, “I wouldn’t be surprised if soon you will see the product (gasoline) prices going up and oil prices going down … because of the lack of refineries.”Energy analysts say two forces are behind a global market in which oil prices soar if anything unusual happens: tight supply with little excess production capacity and growing demand, especially in China.As for the political situation in his own region, Saud said he hopes the proposed Iraqi constitution and upcoming elections will unify the country, and he noted that pessimism that Iraq could carry off its last elections last January proved unfounded. He indicated he was worried, however, that divisions among Iraq’s Kurdish, Shiite and Sunni factions are too great.”We have not seen a move inside Iraq that would satisfy us that the national unity of Iraq, and therefore the territorial unity of Iraq, will be assured,” Saud said.”Perhaps what they are saying is going to happen,” he said in apparent reference to optimistic assessments of the Oct. 15 voting from the U.S. ambassador in Baghdad and others. “I wish it would happen, but I don’t think that a constitution by itself will resolve the issues, or an election by itself will solve the difficult problems.”Saud said if U.S. troops pulled out now, Iraq would dissolve into civil war. He also said that while his country would like to send an ambassador to Baghdad, doing so would make the diplomat an immediate target for assassination.”I doubt that he’d last a day,” Saud said.On Israel, Saud ruled out the kind of diplomatic outreach that Arab and Muslim nations such as Tunisia, Qatar and Pakistan made to the Jewish state during this month’s United Nations summit and general assembly meeting.”We are not establishing relations just for the heck of it,” Saud said. “It would be false because we are in a state of conflict. We have not signed a peace treaty.”Saud said Israeli Prime Minister Ariel Sharon undercut good will after the Israeli withdrawal from Gaza by giving a defiant speech at the U.N.”If he had just been quiet and see what response he (received in the Arab world) it might have gotten us somewhere,” Saud said.If Sharon had capitalized on Gaza with a renewed commitment to the U.S.-backed peace outline known as the roadmap, or had established new negotiations with the Palestinians, “it might have led to something,” Saud said. “It went the opposite way.”Israel began withdrawing settlers from Gaza in August. The last troops departed a little more than a week ago, ending 38 years of Israeli occupation and handing the Palestinians their first full control of land that the peace plan envisions as part of an eventual Palestinian state.Vail, Colorado