OPEC: Oil market ‘well supplied’, prices to climb further

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The Organisation of Petroleum Exporting Countries (OPEC) insists that there is sufficient oil on the market and that oil prices will continue to rise due to numerous problems unrelated to supply levels, according to comments made by OPEC officials in Brussels yesterday (24 June). 

“At the end of the day, the light will be out on the facts” with respect to oil production and supply levels, OPEC Secretary General Abdalla Salem El-Badri said at a press conference following yesterday’s EU-OPEC ministerial meeting, the fifth of its kind since June 2005. 

The organisation says excessive speculation and hedging on financial markets, as well as geopolitical complications such as the conflict in Iraq, are to blame for the price rises. Nonetheless, OPEC is concerned that excessively high oil prices will impact negatively on market stability and investor confidence – and some of its members, including Saudi Arabia, have pledged to increase oil production as part of a commitment to keep prices in check.

The prospect of a further climb in the price of crude oil, which stands close to $140 per barrel this week, is also raising concerns about the possibility of a major global economic fallout, particularly as some analysts expect the price to reach $200 per barrel before the end of the year. “We are heading into dangerous waters,” French Energy Minister Jean-Louis Borloo said at the press conference. Borloo is calling for an “active worldwide energy pact” among key stakeholders in order to prevent economic fallout.

But during a 22 June emergency meeting in Jeddah, Saudi Arabia, oil producing and consuming countries failed to reach a deal on a more far-reaching partnership to bring oil prices down (EURACTIV 23/06/08). 

The EU and OPEC will hold their next ministerial meeting in Vienna in July 2009. 

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