MADRID, July 1: Opec president Chakib Khelil said on Tuesday the oil cartel was concerned about future demand, underlining that the organisation is in no mood to pump more crude to cool record prices.
“The concern we have is about the security of demand,” Khelil, who is also Algeria’s energy minister, told delegates at industry event the World Petroleum Congress in Madrid.
He said there were “big uncertainties” about making huge investments in infrastructure to increase output from the 13 Opec member countries, which currently pump about 40 per cent of world oil.
“I don’t think anyone questions that we have enough resources; the issue is if we are able to supply it to the market,” he said.
The International Energy Agency, the rich world’s energy watchdog, underlined in a medium-term analysis on Tuesday that the market would remain “tight” in the next five years and with supply tensions seen after 2010.
It called for investment in new capacity and said oil demand would increase on average by 1.6 per cent per year up to 2013.
Opec’s uncertainty about future demand arises from increased investment in alternative sources of energy, the impact of energy conservation, falling economic growth and the stepped-up search for non-Opec oil reserves.
Each of these factors could slow demand for oil from Organisation of Petroleum Exporting Countries and the cartel needs to see “a credibility of future demand,” Khelil said.
He stressed that financial market turmoil, which has led to projections of lower global growth and a possible recession in the United States, had already had an impact on investment plans for oil production and refining.
“We see the looming financial crisis having an effect on investment upstream and downstream,” he told delegates during a debate entitled “Deliverability Challenges: Security of Supply and Demand Perspectives.”
He later admitted that consumer and producer countries were on different tracks when it came to identifying the reasons for high prices.
“Everyone agrees that oil prices are too high, both consumers and producers agree on that.
The divergence is where the high prices come from,” he told a press conference later.
He blamed speculators and the weak dollar and called on the United States to help stop the plunge of the greenback, which has been falling against other major currencies.
“They need to stabilise the dollar. Stabilising the dollar will help (keep prices down),” he said.—AFP