Saudi Arabia and other Gulf producers assured Asian consumers that their oil supply was secure but indicated, during ministerial talks yesterday, that they would not increase output to ease high prices.
"I would like to assure you that the importing Asian nations can depend on West Asia (Middle East) for future security and reliability of oil supply," Saudi Oil Minister Ali al-Naimi told a meeting of Middle East and Asian oil ministers in Riyadh.
Security of supply is a worry in Asia, which buys 55 percent of its oil from the Middle East.
Each year of Asian economic expansion feeds growing demand for crude from the Middle East, home to 60 percent of the world's oil reserves.
It is equally important for producers, embarked on massive spending programs to boost output in the long term, to know that future demand will be there for their oil.
Naimi said Asia would account for 70 percent of the world's future oil demand growth.
"The continent of Asia is a huge oil market and given Asia's expanding role in the global economy, it is also today's most important oil market," he said.
The meeting in Riyadh comes just days after the world's largest oil exporter arrested more than 170 people suspected of plotting to attack oil facilities and military bases.
"Security of installations is an omnipresent concern in Saudi Arabia," one diplomatic source said. "The threat is no greater than before."
The price of oil is high on the agenda.
London Brent crude for June was at US$67.09 a barrel yesterday, while U.S. light sweet crude was at US$64.32.
Asian ministers may ask the Organization of the Petroleum Exporting Countries to open the taps and reverse some of the 1.7 million barrels per day cuts the producer group agreed late last year.
Consumers have called on OPEC to help bring down the price and prepare for a seasonal rise in demand in the third quarter.
But major producers have already indicated that no increase in oil supply is imminent.
Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah, on his way to the meeting on Tuesday, said there was no need yet for OPEC to consider boosting oil supplies though the group would not hesitate to raise output when necessary.
In Riyadh, OPEC President Mohammed al-Hamli echoed those sentiments yesterday.
"We do not look at the price. We look at the fundamentals of supply and demand and they are in good shape," he told reporters when asked if producers should boost output to ease prices.
A senior OPEC delegate said world oil markets were balanced.
"The market is well balanced on the crude side. The only problem is the gasoline market in the United States," he told reporters on the sidelines of the meeting.
U.S. fuel traders are nervous because U.S. gasoline stocks have fallen 11 weeks in a row and are down almost 15 percent since the start of February. Prices are rising in part due to strong fuel demand and oil refinery outages.
Demand rose to its highest level in a generation in 2004, fuelled by China. Japanese Trade Minister Akira Amari called for more upstream and downstream investment to meet future demand growth.