WARSAW, 12 July 2007 — Saudi Arabia and other OPEC members said yesterday they were not to blame for near record oil prices, pointing the finger at a global shortage of refinery capacity and international political tension.
OPEC is ready to pump more oil, but for now sees no need and has rebuffed calls from consumer countries that want it take action to lower oil prices near $76 a barrel.
Oil has been on an upward march since January when it sank to about $50. Concerns over shortages of gasoline in top consumer the United States and two rounds of OPEC supply curbs have helped push prices higher.
“OPEC does not find any reason at the moment to increase its production of crude oil,” the group’s president and United Arab Emirates Energy Minister Mohammed Al-Hamli said.
“The member countries of the organization are ready to pump additional amounts of crude oil into the market if the need arises.”
The International Energy Agency, advisor to 26 of those industrialized countries, has for four months called on OPEC to open the taps to avoid over-tightening in the market.
But OPEC ministers yesterday said there was no shortage of crude on the market and that boosting output wouldn’t help.
“The price today is not at all connected with the fundamentals of the oil industry,” Saudi Arabia’s Minister of Petroleum and Mineral Resources Ali Al-Naimi said, in his first comments on the market for months. “There is a good balance between supply and demand. Inventories are in a comfortable position, therefore fundamentals do not support high prices today.” Naimi said the Kingdom’s buyers were not asking for more of its oil.
OPEC members point to high crude inventories as evidence that the market is well supplied. US inventories are at a nine-year high.
In Doha, Qatari Energy Minister Abdullah Al-Attiyah had earlier sounded the same message as his Saudi counterpart. “OPEC cannot do anything about it,” Attiyah said. “The world is facing a shortage of gasoline and diesel, but not crude oil.”
Supply concern due to militant attacks and outages in Nigeria and international political tension over Iran’s nuclear ambitions have also bolstered prices.
The IEA said yesterday that refinery constraints and fears of supply disruption were among factors that have driven crude higher.
“It is drive up by supply anxieties. It is driven up by Nigeria, Iran, by a number of things,” said deputy director William Ramsay. “Plus some fundamentals, by some impediments in the refining sector.
OPEC, which pumps over a third of the world’s oil, next meets in September to chart output policy. Some officials have suggested the exporters may have no reason to change tack then.
For now, some analysts agree with OPEC that slow refinery operations, especially in the United States, and a rush of speculative fund flows are driving prices higher.
London Brent crude hit an 11-month high at $76.63 a barrel on Tuesday, not far from a record $78.65 last August. “You know how much speculative money there is in then market? Plenty,” said Naimi.
New York’s main oil futures contract, light sweet crude for delivery in August, shed 36 cents to $72.45 per barrel before the opening of US floor trading.
“Crude futures were a little lower (yesterday), coming off after yet another day of gains yesterday ahead of today’s weekly US fuel inventories report,” said Sucden analyst Andrey Kryuchenkov.
The US Department of Energy will be issuing its weekly snapshot of American crude oil stockpiles — with all eyes on gasoline or petrol inventories, traders said. Gasoline reserves are under intense pressure as many Americans hit the roads for vacations during what is known as the US driving season.
