Blaming record prices on factors such as geopolitical tensions, speculation and the weak dollar — and not on output levels — he nevertheless pledged that OPEC would act to boost supply if it were to see any shortages in the market. “Even if we increase output tomorrow, the prices will not come down because of speculation and because of a weak dollar,” he said during a visit to Ecuador, a member of the Organization of the Petroleum Exporting Countries. “When we see there is a shortage of supply, we will act,” he added.
Crude oil prices rocketed to record highs above $ 135 yesterday, driven by growing concerns that energy supplies will fail to meet demand, analysts said. They later pulled back to just below $ 133 owing to profit-taking. Brent North Sea oil struck a historic height of $ 135.14 a barrel and benchmark New York light sweet crude hit an all-time peak of $ 135.09. “It seems there is no stopping to soaring oil prices,” said Andrey Kryuchenkov at the Sucden brokerage in London.
“Investors doubt that the market will be able to meet ever growing demand in the long run, with booming emerging market economies underpinning robust demand for energy,” he added. After posting fresh highs, New York’s main oil futures contract, light sweet crude for July delivery, pulled back to $ 132.83 a barrel, a drop of 34 cents from Wednesday’s close. In London, Brent North Sea crude for July delivery was up nine cents at $ 132.79.
Large consumer countries, such as the United States, have pressed OPEC to raise output to help tame prices. Washington says price increases are due to a tight supply but OPEC has largely resisted the calls for a hike. Badri said there was currently no shortage of oil in the market and there was no need for any immediate output hike — or even for OPEC to meet to discuss prices before its next scheduled meeting in September.
He later said at an oil conference he was “puzzled” by what was causing prices to rise because he saw no problems with the fundamentals between world supply and demand. Badri said it would take a long time for exports to switch away from the US dollar for pricing, as anti-US OPEC members Iran and Venezuela have urged. He also said high prices are hurting producing nations by increasing their costs.
“In OPEC, none of us favors extremely high oil prices,” Badri told reporters at a press briefing later. “We want moderate prices.” Ecuador, which rejoined OPEC late last year, has said the group should consider raising output to help lower prices because energy costs are spurring inflation worldwide and particularly hurting poor nations such as itself. But Ecuador, a small player in the group, is the only member to float such an idea.
Badri, who predicted much of future oil demand would come from developing nations, said there was no need to review output levels to help poor nations. Venezuela, Ecuador’s ally and a major oil exporter, has proposed creating a fund from windfall oil revenue to help poor nations.
Global oil supplies could meanwhile fall far short of need and expectations in the next 20 years, the International Energy Agency is concluding with a vast effort of detective work on production prospects, a newspaper report said.
The Wall Street Journal reported that a sweeping review of existing oil fields and investment in oil extraction was leading the IEA to conclude that the ageing of existing oil fields and inadequate investment meant that “future crude-oil supplies could be far tighter than previously thought.”
