Oil surged in March to $128 a barrel, the highest since 2008, as increased concern over the loss of Iranian oil due to tighter sanctions combined with supply hitches elsewhere.
“We are not happy with prices at this level because there will be destruction as far as demand is concerned,” OPEC Secretary General Abdullah Al-Badri told an energy conference.
“We’re working hard to bring down the price. We’re not comfortable.”
His comments weighed on oil prices, which had already fallen back from the March high. Brent crude on Thursday fell as low as $116.10, its lowest since early February. It had been trading above $118 earlier in the day.
The 12-member Organization of the Petroleum Exporting Countries is pumping 32.3 million barrels per day (bpd), Badri said, citing figures given to OPEC by member countries.
That is 2.3 million bpd more than OPEC’s target of 30 million bpd and higher than a Reuters estimate of OPEC output in April published this week.
Al-Badri again identified $100 as a comfortable price - a level endorsed by top OPEC producer Saudi Arabia in January - and said the price was being driven higher by speculators.
“There has been no shortage of oil in the market. Producers have been able to meet consumer needs,” he said. “We also see this as being the case for the rest of 2012 and the foreseeable future.”
“Today the price continues to be driven by excessive speculation,” Al-Badri said.
The extra OPEC oil is filling gaps caused by an unusually large number of supply outages globally. Supply breaks were running at nearly 1.3 million bpd as of early April.
It has also offset a decline in exports from Iran, which is facing stiffening western sanctions over its disputed nuclear energy program.
Iranian oil exports were running at between 200,000 and 300,000 bpd below last year’s level, Maria van der Hoeven, head of the International Energy Agency, told Thursday’s conference.
Iranian officials have said the country exported an average of 2.2 million bpd last year.
The IEA, adviser to 28 industrialized countries and manager of their emergency oil stockpiles, last year tapped its members’ strategic oil reserves to cover shortages caused by the loss of Libyan exports.
There could be a case for releasing stocks if an unexpected event occurred, as with the civil war in Libya, although there is no reason currently to do so, given that the market is well supplied, Van der Hoeven said.
“At this moment, although prices are relatively high, it’s not the case,” she said.
“You can use this instrument only once ... so timing and circumstances are very important.”
Al-Badri’s figure of 32.3 million bpd for OPEC production is even higher than a Reuters estimate of 31.75 million bpd for OPEC output in April - the highest since 2008.
OPEC in December set the target at 30 million bpd, settling an argument that broke out in 2011 after Iran and other members opposed a Saudi-led plan to raise the production ceiling. Output has remained above the target all year as Libyan supply has recovered.
While supply may be ample at present, forecasters such as the IEA have for years been urging oil-producing nations to vastly expand investment in order to meet rising future demand.
Qatari Oil Minister Mohammed Al-Sada, also attending the conference in Paris, warned oil would head ever higher unless trillions of dollars are invested in the energy sector.
Gulf producers will have to stump up $100 billion a year over the next 25 years to meet future demand, out of total investment of $19 trillion, he said.
“If these investments are not achieved by 2016, the price will rise to over $150 in real terms,” he predicted.
