/ 3 June 2003

Oil prices above $30 in ‘nobody’s interest’

Oil prices above $30 a barrel are in ”nobody’s interest” Anglo-Dutch oil giant Royal Dutch/Shell Group chairperson Philip Watts said on Tuesday ahead of an Organisation of Petroleum Exporting Countries (Opec) meeting next week.

”I think there’s a certain point at which oil prices in the $30 range are in nobody’s interest, neither the producers nor the consumers,” Watts told reporters during a five-day international gas conference here.

”I would hope for some stability… but volatility seems to be the order of the day.”

Watts’ comments come a day after world oil prices shot higher in New York, breaking above $30 a barrel for a two-month high, with a gain of $1,15 to R30,71.

In Singapore trade on Tuesday, oil continued to gain, rising $0,10 to $30,81 at 12:15 pm (0415 GMT).

With Iraq’s production still below its historical highs and dwindling US oil stocks, some market players hope Opec will maintain quotas rather than cut them at their June 11 meeting in Qatar.

Opec’s dilemma is that it is still unclear how long it will take for Iraqi production to recover now that sanctions have been lifted on the country.

Iraq’s oilfields were seized almost intact and their output climbed from near zero at the end of the war to around 800 000 barrels per day (bpd) as of last week, according to Iraqi officials.

Total current output exceeds the amount needed for domestic consumption by about 200 000 bpd, still a fairly small amount by global standards.

While Watts noted the ”huge potential” of the Iraqi oil fields, he and other major oil and gas executives said producers are waiting for a legitimate government to come to power in Iraq to begin a process of selecting developers.

”That process ought to be open, transparent, and frankly, it should be a level playing field,” Watts said.

”When that will happen, I don’t know.” – Sapa-AFP