Oil prices won’t come down, says Opec president

Chakib Khelil, president of the Organisation of the Petroleum Exporting Countries (Opec), on Tuesday rebuffed calls from oil-consuming countries to increase supply, saying that the cartel had already done what it could on high prices.

“Opec has already done what Opec can do and prices will not come down,” Khelil told journalists as he arrived for a meeting with European Union energy officials in Brussels.

Ahead of a summit between producers and consumers in Jeddah last weekend, Opec heavyweight Saudi Arabia promised on Thursday to lift its oil production by 200 000 barrels per day.

However, Saudi Arabia’s increased output, to counter the fears of inflation-hit consumers, exposed divisions within Opec at the summit, with Khelil and others opposed to a production hike.

“Other member countries don’t want to increase their production because, as they’ve said many times, from our perspective we don’t see any shortage in the market,” Opec secretary general Abdullah al-Badri said.

In the face of calls from consumer countries for an oil output hike, al-Badri insisted that “the market is full of oil”, blaming “other factors” for the high price of crude, including refinery problems and hedge funds piling into the market.

EU energy commissioner Andris Piebalgs urged Opec to do away with the grouping’s production ceiling in order to provide relief to the market.

“In my opinion, there is no reason to keep ceilings on production,” he told journalists.

“If there are no ceilings, markets will adapt much faster,” he added. “In this respect we could expect prices to go down, not go up as the tendency has been till now.”

French Energy Minister Jean-Louis Borloo, whose country takes on the EU’s rotating presidency in July, stressed that high oil prices were a concern for consumers and producers alike.

“There’s not the producers on one side and consumers on the other,” he said. “We’ve entered a period where we really have to agree on a global energy pact because our interests are clearly linked.”

“We’ve got to decrease our energy needs. Producer countries have to participate, there needs to be clarity and transparency about needs and supply,” he told journalists.

Borloo said that although financial market speculation “exacerbated” high oil prices, it “did not create them”.

“What’s true is that the mass of the financial markets has jumped into commodities,” he said.

Piebalgs also said he was “not convinced” that speculation on financial markets was “a major factor” behind high oil prices.

“The basic difference between us and Opec is that they believe that it is mostly speculation, and in my opinion it is that market fundamentals that are not responding any more and that’s why the prices are going up,” he said.

“Financial markets are necessary to have clarity about how to invest and what prices are to be expected. Financial markets have changed but we have not seen any manipulation.” — AFP

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