VIENTIANE, 27 July 2006 — OPEC has lost control of rising oil prices and they could hit $80 per barrel due to geopolitical concerns sparked by the crisis in the Middle East, an Indonesian official said here yesterday.
Maizar Rahman, designated as Indonesia’s governor at OPEC, said current high oil prices are mainly driven by tensions in the Middle East, home to nearly 80 percent of global oil resources.
“Oil prices are high mainly due to geopolitical factors. The market sees geopolitical factors which can cause disruption of the oil supply,” Rahman said.
“The problem is not a shortage of oil. The problem is the fear of oil supply disruption due to geopolitical factors,” he said. He said oil could hit $80 “if the situation in the Middle East remains the same.” Oil prices are currently around $74.
Asked if the Organization of Petroleum Exporting Countries (OPEC) had lost control over soaring oil prices, Rahman said: “Yes” but he added that OPEC is ready to raise output if the global market calls for an increase. World oil demand in 2007 is set to increase by 1.3 million barrels per day (bpd) or 1.5 percent to reach 85.9 million bpd, according to OPEC. Rahman was in Vientiane for a meeting of energy giants from the 10-member Association of Southeast Asian Nations (ASEAN).
Today, ASEAN as well as energy officials from China and Japan, the world’s second and third largest oil consumers after the United States, and from South Korea, will hold a meeting to discuss energy issues. Indonesian is Asia’s only OPEC member but its oil output has fallen in recent years to about one million barrels per day.
World oil prices surged yesterday as traders reacted to a surprise retreat in US gasoline or petrol reserves, and tracked raging violence in the Middle East.
New York’s main contract, light sweet crude for delivery in September, climbed 75 cents to $74.50 per barrel in pit trading. In London, Brent North Sea crude for September delivery leapt $1.25 to $74.53 per barrel in electronic deals.
