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Oil prices drop after Saudi supply statement

Oil has risen more than 9 per cent this year due mainly to the standoff over the Iranian nuclear program.

oil pump desertEnlarge
The price of oil has risen more than 9 per cent this year but Saudi government says it will halt the rise through increased supply. (Joe Raedle/Getty Images)

Saudi Arabia aimed at calming oil markets Tuesday by saying that oil supplies are in excess of demand and that it would be willing to pump more if supply dipped.

Oil prices dropped two per cent after the statement.

According to the Associated Press, the top crude exporter said that the near $125 per barrel oil price - just $25 dollars short of an all-time high - that has hiked up gas prices around the world was not justified.

"I want to assure you that there is no shortage of supply in the market," Saudi Oil Minister Ali al-Naimi said in Qatar, according to Fox Business. "We are ready and willing to put more oil on the market, but you need a buyer."

The price of oil has risen more than nine per cent this year due mainly to tensions between the United States and Iran over the latter's nuclear program.

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According to Reuters, Riyadh is now pumping 9.9 million barrels per day, the highest rate in decades.

"Oil prices today are unjustifiable on a supply and demand basis," said Naimi, according to Bloomberg. "We really don't understand why the prices are behaving the way they are."

Saudi Arabia is the only oil producing country with enough spare oil to deal with global disruptions.

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http://www.globalpost.com/dispatch/news/business-tech/120320/oil-prices-drop-after-saudi-pledge-pump-more