ROME, 20 April 2008 — Oil at $117 a barrel has left energy producers and consumers in rare agreement there is little they can do for now to prevent prices rising higher still.
Oil hit the latest in a series of records on Friday after a rebel attack in Nigeria added to supply concerns and offset the impact of a US-led economic slowdown, which has begun to eat into energy demand.
“There is a possibility of still going higher,” Shokri Ghanem, Libya’s top oil official, said on his arrival in Rome for talks between producer and consumer countries.
Top fuel burner the United States has led the calls for more oil to try to calm prices, but the Organization of the Petroleum Exporting Countries’ (OPEC) biggest producer Saudi Arabia has dismissed this as political rhetoric.
“Today there is no reason to jump up and down and say ‘we will supply more crude’ — because that request from consuming countries is probably politically-driven rather than a fundamental requirement,” said Petroleum and Mineral Resources Minister Ali Al-Naimi in an interview with industry newsletter Petroleum Argus.
The OPEC has repeatedly said it will not use the International Energy Forum (IEF) in Rome as the occasion to revise its output policy. “There will be friendly talks as usual when we see each other,” said Ghanem. “There are no plans for an official meeting.”
Conspicuous Absences
While nearly all of the 13 OPEC energy ministers will attend the IEF talks from today to Tuesday, Chakib Khelil of Algeria, the group’s president, is staying away, as is US Energy Secretary Sam Bodman, according to aides.
The United States is smarting from the impact of high oil prices and gasoline at more than $3 a gallon has begun to erode demand.
The deputy executive director of the International Energy Agency, which represents consumer countries, said the world needed to curb demand through greater efficiency and at the same time supplies should be increased.
But in the near term, there was little to stop oil becoming more expensive. “There’s not much to get in the way,” William Ramsay said.
A sustained bull run, which set in around 2002, has been driven by factors including strong demand from emerging economies, such as China and India, and chronic under-investment.
That has left only a narrow margin of spare capacity in the event of supply disruption, meaning oil markets react strongly to the slightest interruption of output.
The IEA and international oil companies, which will also be represented at the IEF, have argued producer nations need to allow greater access to their reserves to help develop difficult sites.
Meanwhile, in Tehran, Iran’s President Mahmoud Ahmadinejad said yesterday that crude oil at $117 a barrel was too low and it still needed to “discover its real value.”
“Oil is a strategic commodity that needs to discover its real value,” Iran’s state-run television website reported Ahmadinejad as saying.