DUBAI: Officials from the Organisation of Petroleum Exporting Countries yesterday insisted that scorching oil prices had little to do with the group’s policy, and that it was doing enough to meet demand for their product.
As oil prices eased back from the record $89 a barrel in New York hit on Wednesday, Indonesia’s Oil Minister Purnomo Yusgiantoro said the group had no plans for an emergency meeting ahead of a summit in Saudi Arabia’s capital of Riyadh on November 17 featuring the heads of member states within the organisation.
Oil prices in New York are up 78% from $49.90 a barrel seen at the start of this year but remain well below the inflation-adjusted high of more than $101 a barrel hit in 1980.
Opec leaders may still discuss oil market developments at the Riyadh summit, though it has a different agenda, a delegate attached to a leading oil producer within Opec told Dow Jones Newswires yesterday.
“The fact that the ministers will see each other doesn’t prevent them from talking about the market. But the programme is geared for something different,” he said.
Indonesia’s Purnomo, whose country, according to Opec governor Maizar Rahman, is raking in $730,000 a day in windfall profit for every $1 increase in crude prices, attributed the surge in oil prices to tension between Turkey and Kurdish separatists and dwindling US oil stockpiles.
The Opec delegate said: “It’s a fact how vulnerable the oil market is to geopolitics.
“If it was a lack of crude, Opec could do something. But we don’t hear or see it. Opec does what’s necessary,” the delegate added, highlighting financial speculation as a fuel for the rally in prices.
“The worry is ... the impact it will have on the overall economy,” the Opec delegate said. “It’s nothing to cheer about.”
Kyle Cooper, director of research at IAF Advisors in Houston, said: “The market is simply about money flow. That is it.
“As long as there is global liquidity and somebody trying to push a doomsday scenario to initiate buy orders across a desk, prices are going to move higher. And there are a lot of trade desks and sales teams pushing for more buy orders.”
Saudi Arabia’s one-time oil minister Sheikh Ahmed Zaki Yamani said Opec must boost its crude output to ease tensions and quell oil prices.
Yamani, a legendary figure who led the kingdom’s oil policy from 1962 to 1986, said the group’s decision in September to increase supplies by 500,000 barrels a day from November 1 was “too little, too late”.
The 12-nation producer group, whose output meets about 40% of daily global consumption, agreed last month to raise daily output to around 27.25mn barrels in response to market concerns that demand could outstrip supply as the world’s biggest energy consumers in the northern hemisphere enter the peak-demand winter period.
The move appears to have done little to calm prices.
Last week, the Paris-based International Energy Agency warned that oil stockpiles among wealthier nations had declined against trend in the July-August period and the days of consumption covered by those inventories had fallen below the five-year average by the end of August to 53.5 days, almost a day lower than its estimate for the previous month.
l Oil exporters have no influence over the factors that have triggered a spike in crude prices, an official at the UAE’s largest state-owned oil company said in remarks published yesterday.
“The main reasons behind the increase in prices is the shortage in refining capacity and geopolitical tensions...” said Sultan al-Mehairi, the head of marketing and refining at Abu Dhabi National Oil Company (Adnoc).
“These are the main factors that are affecting the market and producers have no influence over them,” Mehairi was quoted as saying by Abu Dhabi-based newspaper Al Ittihad.
Adnoc is the production arm of Abu Dhabi, which controls more than 90% of the oil resources of Opec member UAE. – Dow Jones Newswires/Reuters |
