OPEC chief says threat against Iran, weak dollar behind oil price hike

Editorial Note: The following news reports are summaries from original sources. They may also include corrections of Arabic names and political terminology. Comments are in parentheses.

www.chinaview.cn 2008-07-02 06:17:53

MADRID, July 1 (Xinhua) --

The Organization of Petroleum Exporting Countries (OPEC) President Shakib Khalil said on Tuesday threat against Iran and a weakening U.S. dollar were the major forces behind oil price hike.

At a press conference on the sidelines of the World Petroleum Congress in Madrid, Khalil insisted that high oil prices were not caused by a lack of supplies, rebuffing the claim by some oil consuming countries.

Instead, the OPEC chief attributed the price hike to the devaluation of the U.S. dollar and accompanying market speculation, the geopolitical situation including the tension between Iran and the West, and the impact of bioethanol which had lowered diesel production.

"We will not see lower oil prices without finding solution to possible war threats in certain oil producing areas," Khalil said.

There was "a need to do something about geopolitics and the dollar," he added.

Khalil warned if Iran get attacked, the oil price could rise even further since the oil-rich country's disrupted production may not be compensated.

"It is obvious that if you curtail 4 million barrels per day from the market, you are going to have a big problem," he said. "I do not see who can replace that, including OPEC."

IEA warns of tight oil market in medium term

www.chinaview.cn 2008-07-02 02:56:50

MADRID, July 1 (Xinhua) --

The International Energy Agency (IEA)warned on Tuesday of a tight oil market in the medium term till 2013, blaming market fundamentals rather than speculation for the record high prices.

In its annual medium term oil market report, which was presented here Tuesday, the Paris-based IEA said the oil market will remain tight in the medium term, although soaring prices and slower economic growth are reducing demand rise.

According to the IEA, global demand for oil products will grow by an average of 1.6 percent per year to 2013, from 86.9 million barrels per day this year to 94.1 million barrels per day.

The new estimates were scaled down from the agency's previous forecasts issued last July, which predicted a yearly increase of 2.2 percent to 2012.

The report said high oil prices are clearly affecting consumer behavior and threatening global economic growth, therefore contributing to the downgrade in demand growth.

"With oil prices hitting 140 U.S. dollars we are clearly in the third oil shock, with prices affecting economic growth, truck drivers are going on strike. Airlines are closing down," IEA Executive Director Nobuo Tanaka told a press conference on the sidelines of the World Petroleum Congress.

Meanwhile, the report said supply constraints, refinery limitations and continued demand growth in emerging markets will maintain pressure in the market over the medium term.

"Despite a considerable downward revision to our global oil demand forecast due to weaker economic growth projections and a doubling of oil prices over the past year, structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium term," the report said.

Compared to the July forecasts, the IEA also made significant downward revisions to both non-OPEC supplies and OPEC capacity estimates, citing project delays and declining output from mature oil fields.

"Project delays remained a major factor in supply-side underperformance, with slippage estimated at up to twelve months on average for the large projects surveyed, alongside an estimated doubling of costs," the report said.

"Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream -- to assure that the market is adequately supplied," said Tanaka.

The IEA predicted although the oil supply and demand would be close over the next five years, they would be in different pattern of development.

Contrary to supply trend, which was expected to maintain strength over the next 18 months and then lose steam, demand growth would be weakest in the first two years of the period, building up as global economic growth strengthens from 2010 on.

This would result in a temporary rise of spare capacity to above four million barrels a day in 2009 and 2010, before a retreat to minimal levels by 2013, the IEA estimated.

As the energy watchdog for the Organization for Economic Cooperation and Development (OECD), a grouping of the world's most industrialized countries, the IEA report blamed the current oil price hike on market fundamentals rather than speculation.

"OPEC production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build. These factors demonstrate that it is mainly fundamentals pushing up the price," Tanaka said.

Oil consuming countries, including many OECD members, have been arguing the oil price hike was mainly due to rising demand from emerging economies and insufficient supply, while oil producing countries said speculation and the weakening U.S. dollar were to blame.

The IEA report said demand growth would remain heavily concentrated in developing countries, where total consumption would nearly reach parity with mature economies by 2015.

By contrast, demand growth in OECD countries was expected to contract slightly over the next five years, according the report.

Editor: Yan Liang

OPEC chief: Developing economies face oil price dilemma

www.chinaview.cn 2008-07-01 23:49:32

MADRID, July 1 (Xinhua) --

Developing countries are facing a dilemma in managing oil prices on their home market, Chakib Khelil, president of the Organization of Petroleum Exporting Countries (OPEC), said here on Tuesday.

Speaking at a plenary session of the on-going 19th World Petroleum Congress in Madrid, the OPEC chief said that with the different economic bases and purchasing powers it is irrational to let people from the developing countries have the same price as those in developed ones.

Governments in developing nations thus face a dilemma: too much subsidy will be an economic burden, while no subsidy will be unfair for the general public, according to the OPEC chief.

It is unimaginable, Khelil said, to have one and the same price for people with a monthly income of 500 U.S. dollars and those with 3,000 dollars.

The fact that Europe and the United States have different oil prices tells us that even among the developed economies governments would subsidize oil prices, Khelil said.

The OPEC leader said that volatile and high oil prices are no good for either oil purchasing countries or producing countries.

He said OPEC, which is producing 40 percent of the world's crude oil, does not set the price.

With new technology, OPEC will increase its production and turnout about 50 percent or even 60 percent of the world oil supply in the future, Khelil said, adding the cartel will contribute about 52 percent of the world's oil by 2010.

Editor: Yan Liang

OPEC concerned about future demand of oil

www.chinaview.cn 2008-07-01 18:14:16

MADRID, July 1 (Xinhua) --

The Organization of Petroleum Exporting Countries (OPEC) was concerned about future demand when considering whether to boost investment in oil production, the cartel's president said on Tuesday.

"The concern we have is about the security of demand," Chakib Khelil told delegates here at the World Petroleum Congress, which is the biggest gathering of leaders from the world oil producers in every three years.

Khelil said the big uncertainties have increased the risks for oil producing countries to make huge investments in production.

As the international oil prices kept rising, which climbed above 143 U.S. dollars per barrel, oil producing countries were under growing pressure from consuming nations to increase production in order to contain further oil price hike.

But most OPEC members have insisted the market is currently fully supplied, blaming speculations for the price hike. They said there should be clear demand in the market before any increase of production.

Khelil said the oil cartel's concern about future demand mainly result from the global economic outlook, prospects of oil prices, the looming of a global financial crisis and the promotion of alternative energies in many countries.

Editor:

OPEC rejects call to set price band for oil

www.chinaview.cn 2008-07-01 03:08:26

MADRID, June 30 (Xinhua) --

The President of the Organization of Petroleum Exporting Countries (OPEC) rejected a call on Monday 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 (U.S.) dollars and they were saying 13 dollars. We talked about 22 dollars and they were saying 18 dollars. Then we put a price band of 22-30 dollars, but they never agreed with the price band," OPEC President Shakib Khalil told reporters on the sidelines of the World Petroleum Congress here.

OPEC set a price band between 22 and 28 U.S. dollars 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," Khalil said.

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

Khalil, 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, Khalil 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 U.S. sub-prime crisis and the weakening U.S. dollar.

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

"May be the price may go up to 150 U.S. dollars (per barrel), may be to 170 U.S. dollars (per barrel) as summer driving demand rises. But end of this year, we expect prices to come down," he said.