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Caracas, May 21: Record-high crude prices have nothing to do with supply and demand but rather are caused by speculation and a weak dollar, Opec Secretary General Abdullah al-Badri said on Tuesday.
World leaders have hounded Opec to pump more as prices hurtle towards $130 per barrel, but Badri said the organization would not act on production levels until it was warranted by market fundamentals. "There is a lot of oil in the market, stocks are very high, about 53 days forward," he said in an interview with Reuters during a visit to Opec founding member Venezuela. "We are worried because these prices have nothing to do with supply and demand."
The International Energy Agency on May 13 reported that oil stocks in OECD countries equaled 53.3 days of demand in March, at the same time revising down its forecast for world oil demand growth in 2008 because of record prices and slower economic growth. Badri warned prices could keep rising due to non-market factors such as a continued decline in the dollar, but said the organisation sees no reason to hold an extraordinary meeting before the next one scheduled for September.
Oil prices topping $129 per barrel have sparked anger from consumer nations that have accused Opec of gouging, but Badri said the boom in oil prices has lifted commodities prices across the board, which has made it more expensive to pump oil.
"I'm not an advocate of high oil prices," he said, adding that the situation "is not a bonanza for us" because higher prices for commodities ranging from food to steel have created new expenses for producer nations. "If you want to produce more oil now, you have to pay more," he said. Asked if Opec was considering moving away from the plummeting dollar as a way of stabilizing energy markets, Badri said: "It's not something that happens overnight to move from currency to currency, every country has its own policy."
The United States House of Representatives passed legislation on Tuesday allowing the US to sue Opec members for working to set crude prices -- though the White House has threatened to veto the measure. "It's their policy and I'm not going to challenge it, but I think this is not the way to handle any problem, problems should be solved with dialogue" he said. "You cannot go and just blame Opec or try to abolish Opec." An Opec decision to raise output could help...
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