Saudi Oil Minister Ali al-Naimi said Tuesday the Organization of Petroleum Exporting Countries was seeking to restore the balance in the oil market despite its belief that prices were influenced mainly by market factors, the value of the dollar and pessimistic views about the adequacy of future supplies.
“There are many factors that influence oil prices, one of which is the dollar. If the dollar is stronger, it will have an impact on oil prices,” he told a press conference in the Saudi capital Riyadh. Al-Naimi dismissed as baseless pessimistic views saying future supplies were insufficient. “Reserves are sufficient at this stage,” he said, adding that this pessimism was playing a major role in causing price instability. “The kingdom (Saudi Arabia) and OPEC seek to create a stable market. This is what we are doing. The stronger this unfounded pessimism becomes, the more unstable the oil market is,” the minister said. Al-Naimi dismissed the view that OPEC was to blame for the alarmingly high oil prices, saying the organization has not been the determining factor since 1986. He refused to predict future price levels, stressing the organization’s view that prices were mainly determined by market factors. He rejected the argument that political unrest in the Middle East was pushing prices up. “This is not the first time that we have unrest in the region. Unrest has been happening since 1980 until today. There is no reason why prices should be at the current level,” he said. The minister was dismissive of the view that demand on oil was higher than current supplies.
OPEC, which controls 40% of the world’s oil output, blames recent price increases on speculation, mainly in options trading, rather than on supply shortages. OPEC analysts believe that a further output increase of up to 1.5 million barrels per day would be necessary to stop the current rise in oil prices. The organization’s heads of state and oil ministers are scheduled to meet in Riyadh on Saturday. “The Riyadh summit will not deal with output and prices. Prices are discussed in normal OPEC meetings,” al-Naimi said. The next OPEC policy meeting is scheduled for December 5 in Abu Dhabi. The Riyadh conference will focus on the OPEC members’ longer-term strategies as and strategies to maintain energy supplies and stabilize oil prices as well as environmental protection issues. OPEC oil prices went down over the weekend ahead of the crucial Riyadh meeting.
According to calculations by the Vienna-based OPEC Secretariat on Tuesday, one barrel, or 159 liters, of OPEC-produced crude on Monday cost $88.80, down 91 cents from Friday’s $89.71. (m&c.com)