Opec toothless to tame high oil prices : UAE

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Paris, April 6: Opec is powerless to bring down oil prices that are closing in on their record $70 a barrel high, United Arab Emirates’ oil minister Mohammed bin Dhaen al-Hamli said on Thursday.

“Fundamentally there is nothing we can do,” Hamli told reporters when asked how Opec might tame oil costs that are at their highest for a quarter of a century in real terms.

“Demand is very robust. The major crashes were supply-driven crashes. The prices we are witnessing now are supported by robust demand. At what level will demand start to get sluggish? I really don’t know, but it will at some point.” US crude climbed towards $68 a barrel on Thursday. Opec, which accounts for over half the world’s oil exports, has been pumping almost flat out for months. But prices remain stubbornly high because of robust demand, supply disruptions in Nigeria and Iraq and worries over the security of Iranian flows.

A Reuters survey found OPEC output in March fell 180,000 barrels per day to 29.55 million bpd, mainly because of militant attacks on Nigeria’s oil industry. Hamli, in Paris for a major oil conference on Friday, expressed some concern at last week’s steep drop in US gasoline stocks. The United States, consumer of more than 40% of the world’s gasoline, is starting to gear up for the summer driving season when motor fuel demand peaks.

“The United States is a big and important market. When there is a drawdown we are a little bit concerned,” he said. OPEC still has some spare production capacity, primarily in Saudi Arabia, but Hamli noted this oil was the sort of heavy, high sulphur crude that refiners find difficult to process. He added that the UAE aimed to expand its output capacity. “We are working on expanding our capacity. We hope to get up to 3.5 million bpd by 2010-2012,” Hamli said, adding the UAE was currently pumping about 2.5 million barrels per day.