Kuwait says high oil price not justified

Newly appointed Oil Minister Hani Hussein takes the oath of office during the 14th legislative session of parliament in Kuwait City February 15, 2012. REUTERS/Stephanie McGehee (KUWAIT - Tags: POLITICS)

Justification: Oil Minister Hani Hussein believes current oil prices are not justified under the supply and demand theory

Kuwait's oil minister believes current world oil prices are not justified, adding that the Gulf state's current production rate will not affect its level of strategic reserves.

Fears of possible supply disruptions from Iran and political tensions across the Middle East have helped to drive up the price of benchmark Brent crude, which is trading at just under $126 a barrel, according to Reuters.

"Under the supply and demand theory, oil prices today are not justified," Oil Minister Hani Hussein said in an interview broadcast on state television over the weekend.

Many producers fear high oil prices could damage demand by crimping growth in consuming countries. Brent crude prices shot to an all-time high of over $147 a barrel shortly before the global financial crisis of 2008.

Hussein said Kuwait was producing about 3 million barrels of oil a day, near the country's capacity, adding it was aiming to raise daily production to 4 million barrels by 2020.

"Kuwait's current level of production will not affect the country's level of strategic reserves," Hussein said.

He also said he hoped Iran would not close the Strait of Hormuz waterway that is vital for ships carrying the region's oil, but reiterated that Kuwait had a "strategic plan" should this happen, but did not provide details on what the plan entailed.

Some Iranian officials have threatened a closure of Hormuz in retaliation to new Western sanctions over the Islamic Republic's nuclear program.

Western powers have been trying to raise pressure on Tehran by stemming Iran's oil exports and some Gulf Opec producers, including Kuwait, have said they are ready to meet any increase in demand for oil, Reuters reported.

Hussein added that there may soon be a result in a case Dow Chemical has brought against state-run Kuwait Petroleum Corporation after the Gulf state canceled a $17.4 billion proposed joint venture in 2008. There was a possibility Kuwait would be fined, he said.

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