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OPEC rejects call to set price band for oil

EU

The President of the Organization of Petroleum Exporting Countries (OPEC) rejected a call to set any price band control in face of relentless rise of world oil prices.

“Producing and consuming nations never agree on any price. You remember we talked about $15 and they were saying $13. We talked about $22 and they were saying $18. Then we put a price band of $22-$30, but they never agreed with the price band,” OPEC President Chakib Khelil told reporters on the sidelines of the World Petroleum Congress.

OPEC set a price band between $22 and $28 in March 2000, which was abandoned in January 2005 due to market conditions.

“Then we did away with the price band. Now they say we need to come back to the price band, but we are never going to agree. Let the oil market decide the price,” Khelil said.

As oil prices kept rising, which hit a new record high close to $144 per barrel today, some countries, notably India, had suggested a return to the price band control.

Khelil, once again, stressed that the price hike had nothing to do with supply, saying the market is fully supplied despite rising demand.

“The demand is being met. We expect high demand in summers, but stocks of 53 days are good enough. There is no lack of supply,” he said.

Instead, Khelil blamed the soaring oil prices on speculation, which became especially active in the oil markets since there were no better returns from other instruments due to the US sub-prime crisis and the weakening US dollar.

Khelil warned that the oil prices could rise further to a level as high as $170 per barrel since demand is set to increase in the summer.

“Maybe the price may go up to $150 (per barrel), maybe to $170 (per barrel) as summer driving demand rises. But end of this year, we expect prices to come down,” he said. (Xinhua)

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