SHUNEH, Jordan, May 21: Opec president Sheikh Ahmed Fahd al-Sabah vowed at a World Economic Forum (WEF) meeting Saturday that the cartel will respond to new forces in the fast-changing oil market by the end of the year. He said that Opec would change its “culture” and reformulate its price band of $22-28 a barrel — suspended since January after sharp rises in oil prices to well over $50 made it a virtual irrelevance.

The culture of the market has changed and in the second quarter (where demand normally drops) there is a growth in demand, Sheikh Ahmed, who is also Kuwait’s Energy Minister, told a panel discussion on oil. We are waiting until the end of the year to review the experience of the last two years to reformulate our culture and price band,” he said.

He said global demand for oil grew 2.6 million barrels per day (bpd) to 82.5 million bpd in 2004 and by the fourth quarter this year demand is expected to increase to 85 million bpd. Last year demand grew four to five per cent while this year it is growing three to four per cent. We normally had such an increase in four years (in the past), while we had it in one year, the Opec chief said.

The market is no longer only governed by supply and demand, as several other factors have started to play a role. The market has changed ... Factors like the environment, geopolitics, (higher) economic growth and stockpiles are now playing a major role, Sheikh Ahmed said.

The Opec president said members of the Organization of Petroleum Exporting Countries are committed to ensure enough supplies in the market. Our main target is to ensure continuity of supplies. There is already two million bpd of oversupply in the market, he said.

Opec members are willing to invest to increase output capacity, but they are concerned about the security of growing demand and other sources of energy. Opec officials have said that current Opec’s capacity was approaching 32.7 million bpd and it would reach 33 million bpd by the end of 2005. Sheikh Ahmed said Opec is looking to achieve a fair and stable price for oil.—AFP