Opec worried by record oil prices

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.

Satisfying demand

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

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Related stories


Already a subscriber? Sign in here


Latest stories

Suicide cases soar in Zimbabwe

The economic crisis in the country appears to be pushing people over the mental edge

OPINION| New UK work visa to exclude graduates from Africa

If graduates did not get their qualifications from the list of top 50 universities, 40 of which are in the US, France, China, Hong Kong, Australia, Germany, Canada and Japan, they will be excluded

Hackers infiltrate SA illicit financial flows conference with porn clip

The conference was attended by state agencies, blue- chip global and local non-governmental agencies and public accountability experts

OPINION| South African audiences want more authentic and accurate diversity...

The media has the power to shape perceptions, so television shows and movies can help shape a positive view of people who feel stereotyped

press releases

Loading latest Press Releases…