LONDON, 19 August 2004 — OPEC producers have said they see little impact on economic growth so far from oil’s relentless price surge which yesterday racked up yet another record high. OPEC said in its monthly market report it had raised production in July and expected to push September output to 30.5 million barrels per day (bpd) to allow world stocks to build and keep prices under control.
US oil futures set a high of $47.17 a barrel yesterday — up nearly $10 a barrel since the end of June. Record peaks have been set in all but one of the last 14 trading sessions on the New York Mercantile Exchange.
OPEC said that the world economy seemed to be coping just fine. “The direct contribution of the concern-driven rise in oil prices to the economic slowdown in 2004 has been very small,” the organization said in its monthly oil market report yesterday.
OPEC’s own reference basket price was last valued at $41.75 a barrel, after spending all this year above the organization’s official $22-28 a barrel target range.
“Going forward much will depend on how long the price of the OPEC reference basket remains above $35,” the report from OPEC’s Vienna secretariat said.
“The effect would be greater in 2005. The impact on the developing world would be greatest in the large trading economies of Southeast Asia,” it added.
Oil prices are surging as rapid demand growth, led by China and the United States, stretches the world supply system to the limit. The strain on world supplies would magnify the impact of potential disruption to supplies from a big producer.
German Chancellor Gerhard Schroeder said yesterday it was important to carefully monitor oil costs but that record-high crude prices were not yet affecting economic growth.
The secretariat’s report — used by ministers as a guide for setting supply policy — is the last before OPEC meets on Sept. 15 to set policy for the fourth quarter.
The assessment of a modest economic impact will strengthen the argument of price hawks in the organization who are reluctant for the group to let supplies build too much and risk a sudden price fall.
OPEC said it had already raised production in July to a level that should permit a substantial build in world oil inventories in the fourth quarter of this year.
OPEC raised production 599,000 barrels per day in July to 29.57 million barrels per day, the organization said.
July’s production figure is more than 1.25 million bpd above the organization’s 28.25 million bpd estimate of likely demand for its crude oil during the fourth quarter when heating demand rises during the northern hemisphere winter. “OPEC production in August is expected to reach 30 million bpd and may increase further to 30.5 million bpd in September,” the report said.
“On current trends OPEC production will be more than adequate to meet demand in the remainder of 2004 and 2005,” it added.
OPEC expects demand for its crude oil next year to hit 27.5 million bpd, up from a forecast 27.17 million bpd over the course of this year, the report said.