Make peace with Iran to cool oil prices: OPEC
OPEC chief attributed the high oil prices to the devaluation of the US dollar and the tension between Iran and the West. Gainers & Losers | Oil Inflation | Fuel saving tips
By Agencies |
MADRID: The Organisation of Petroleum Exporting Countries (OPEC) on Tuesday set the steadying the US dollar and the easing of tensions between the West and Iran as key conditions for stabilizing oil prices.
High oil prices were not caused by a lack of supplies, OPEC President Chakib Khelil said at the 19th World Petroleum Congress in the Spanish capital Madrid.
There were enough reserves to meet the market demand for the next 50 years, said Khelil, who is also the Algerian energy minister.
OPEC countries were investing $120 billion upstream to increase their production by four million barrels per day by 2012, according to the Khelil.
The OPEC chief attributed the high oil prices to the devaluation of the US 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.
High oil prices were not caused by a lack of supplies, OPEC President Chakib Khelil said at the 19th World Petroleum Congress in the Spanish capital Madrid.
There were enough reserves to meet the market demand for the next 50 years, said Khelil, who is also the Algerian energy minister.
OPEC countries were investing $120 billion upstream to increase their production by four million barrels per day by 2012, according to the Khelil.
The OPEC chief attributed the high oil prices to the devaluation of the US 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.
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There was a perception by the market that some oil producing areas could be affected by a "war risk," he explained.
"This is not an issue of supply," Khelil insisted. "Unless we address the real causes, we will not see lower oil prices."
There was "a need to do something about geopolitics and the dollar," he added.
The dollar would become devalued even more if the European Central Bank raised interest rates, further affecting oil prices, Khelil observed.
The OPEC chief denied that the cartel "set oil prices," insisting they were determined by the market.
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High prices were not in the interest of producers, because they risked destroying demand, Khelil explained.
Oil supply and demand will be close over the next five years, the International Energy Agency (IEA) meanwhile said in a report presented at the Madrid congress.
Falling demand will help to ease the oil market, but it will tighten again towards 2013, IEA Executive Director Nobuo Tanaka said.
Tanaka expressed concern over the effect cutting fuel subsidies was having on poor people in developing countries.
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He called on governments to accompany such cuts with measures to help the poor, and on international financial institutions to adopt policies to that effect.
IEA head of oil market division Lawrence Eagles denied claims by producer countries and some European politicians that market speculation was a major reason for soaring oil prices.
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If speculators were pushing prices upwards in the long term, "we should see the market show an imbalance," which was not happening, Eagles said.
The IEA was concerned about the decline of mature oil fields, Eagles said, but added that new projects in countries such as Brazil, Russia or in the Gulf of Mexico could add to future supplies.
Christophe de Margerie, president of the French oil giant Total, said the company was on the verge of signing a service contract in Iraq, but was not expecting to make major investments there until after next year.
The World Petroleum Congress, one of the main events in the oil industry, was bringing together thousands of delegates from more than 50 countries from Monday to Thursday.
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