The Organisation of the Petroleum Exporting Countries (Opec) voiced concern on Tuesday over oil’s relentless rise towards $88 a barrel, but some members said the exporter group can do nothing more to control the rally.
Worried that oil near $80 was too costly, Opec agreed last month to raise production by 500 000 barrels per day (bpd) from November 1. Prices have marched steadily higher ever since, but Opec insisted it is pumping enough crude to satisfy consumers.
“While the organisation does not favour oil prices at this level, it strongly believes that fundamentals are not supporting current high prices and that the market is very well supplied,” secretary general Abdullah al-Badri said in a statement.
Stocks of fuel in major consuming countries are comfortable, he said.
“Opec cannot do much now,” said Libya’s top oil official, Shokri Ghanem. “Opec did all that it can.”
The 10 Opec members, excluding Iraq and Angola, bound by the November supply agreement are in the process of implementing their portion of the increase, said the Opec statement.
Even so, oil is closing in on the inflation-adjusted high of $90,46 seen in 1980, with investors citing rising tension between Turkey and Kurdish separatists in Iraq, robust oil demand growth, tight fuel stocks and a weak dollar.
Opec officials brushed off supply worries, saying they are shipping more than enough crude to consumers. They blamed soaring prices on speculative hedge funds and political tension.
“The market fundamentals are in balance. There is too much money coming into the market,” said Indonesia’s Opec governor, Maizar Rahman, referring to speculative investors who see energy as a good bet.
Leading Opec producer Saudi Arabia, the driving force behind the November increase, is yet to make public comment.
But delegates from two Opec countries in the Middle East said they were unaware of any talk of raising supplies beyond the extra 500 000bpd agreed from November 1.
“I have not heard of any talk of a further Opec output increase,” said one of the delegates, declining to be named.
The second said he had heard nothing from other Opec members to suggest a further production hike was on the cards.
With ministers in the Persian Gulf only just returning to their desks after the Muslim fasting month of Ramadan, it may take time to contact everyone involved, said an Opec source.
Opec officials also said heightened political tension was behind the price spike. “It is not because of a lack of crude oil,” said Libya’s Ghanem. “There is all the uncertainty in Iraq and the Gulf area.” — Reuters
Additional reporting by Janet McBride and Peg Mackey in London