AMSTERDAM: Opec, producer of 40% of the world’s oil, doesn’t need to take action after crude prices reached a six-month high amid a dispute between Iran and the UK over the detention of 15 British servicemen, Qatar has said.
“Opec is not powerless, but there is no reason to do anything at this point,” Second Deputy Premier and Energy Minister HE Abdullah bin Hamad al-Attiyah said by phone yesterday from Paris.
“There’s no shortage of supply. The rise is related to geopolitical tensions.”
The 10 members of Opec that are subject to production quotas agreed at meetings in October and December to lower output by 1.7mn barrels a day and stem a slump in prices from a record $78.40 a barrel on July 14.
At its last meeting on March 15 it agreed to keep production limits stable. Oil fell as low as $49.90 on January 18.
“Opec is going to need to put more oil on the market unless it is really trying to push prices back up to the sort of levels we saw last summer,” Julian Lee, senior analyst at the London-based Centre for Global Energy Studies, said yesterday in a television interview.
“It is our view that Opec has cut too much oil from the market.”
Oil prices have climbed 7% since the sailors and Marines were detained by Iranian forces on March 23. Almost a quarter of the world’s oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.
Crude will fall back as soon as the dispute is resolved, al-Attiyah said. A bottleneck of refining capacity in the US ahead of summer driving season is also part of the reason oil prices are climbing, he added.
Yesterday, oil extended a nearly two-week rally amid the escalating UK-Iran tensions and worries over US gasoline supplies ahead of summer driving season.
US crude rose 14¢ to $66.17 a barrel by evening, after rising 3% to a six-month closing high the previous session. Prices have risen about 12% since March 19.
London Brent rose 45¢ at $67.92 a barrel. Earlier in the session, the European benchmark rose briefly above $69 for the first time since September 2006.
“We had a very strong rally yesterday and for the last 10 days, so there is some profit-taking,” said Olivier Jakob, an analyst at Petromatrix. “The market is driven by Iran and can go up or down easily by 50 cents depending upon the next headline.”
The Iran tensions come as energy traders eye dwindling stockpiles of gasoline in the US leading into the summer driving season.
US gasolines supplies have fallen about 7.5% since early February, due in part to slow production from refiners undergoing seasonal maintenance.
A strike, in its 17th day, at the French Mediterranean oil terminal Fos-Lavera, the world’s third-largest port for refined oil products, is also endangering refinery operations and gasoline exports to the US.
Utility Gaz de France and striking workers failed to thrash out a compromise on Thursday.
Talks started again yesterday, and if they fail to reach a deal, some refineries, which have already reduced operations, say they will shut completely.
“The European refining complex looks to be on the verge of moving into extreme tightness - at least in the near term - if talks today between French dock workers in Marseille and GDF do not lead to a resolution,” Citigroup analysts said.
“We note that a move to full shutdown of refineries is more material than a reduced level of runs, because of the time and risks associate with the restart.”
The dispute started on March 14 when GDF rejected a union demand that only port staff should hook up liquefied natural gas cargoes at a GDF terminal due to start up at the end of 2007.
The strike could close nearly half of French refineries by next Wednesday and halt fuel supplies to millions of motorists in southeast France by the end of next week, France’s petroleum industry body UFIP said.
Their full closure would slash about 7% of European refinery capacity. – Bloomberg, Reuters