PARIS (Reuters) – OPEC ministers on Wednesday brushed aside worries that inflated fuel prices will slow economic growth, saying there was little more they can do to rein in $120-a-barrel crude.
Iraq’s Deputy Prime Minister for Energy Affairs Hussain al-Shahristani, a former oil minister, said OPEC had done all it could to calm the rally.
“All that OPEC can do is provide the market with the oil it needs and it is doing that,” he told reporters at a Paris oil conference. “We have not seen any slowdown in growth.”
Oil on Wednesday traded above $123 a barrel for Brent crude, its highest since August 2008, prompting another alarm call from the International Energy Agency, oil watchdog of the industrial economies.
“Oil at $120 or more has an effect on economic activity. We have seen similar levels during times of economic slowdown if not recession,” its Deputy Director Richard Jones told Reuters in Dubai.
The IEA and OPEC remain at odds on the root causes of soaring crude prices. The agency points to roaring demand from Asia and a reviving West.
“The price began rising in the fourth quarter of 2010 because demand exceeded supply by 1.1 million barrels per day (bpd). At that point stocks were falling and companies were willing to pay more for oil,” Jones said.
OPEC sees a market divorced from the realities of supply and demand, driven by political upheavel and its worst fears.
Prices are being stoked by speculators rather than any shortage of supply, UAE Oil Minister Mohammed bin Dhaen al-Hamli told the Paris conference. OPEC could not help, he said.
“There is little we can do in terms of price control,” Hamli said. “International markets are choosing to ignore market fundamentals and bet on the worse case scenarios,” he said.
The Organization of the Petroleum Exporting Countries, which exports more than half the world’s internationally traded oil, has resisted calls for an emergency meeting before its next scheduled conference in June in Vienna.
But those members of the group that have spare capacity, including leading producer Saudi Arabia and the United Arab Emirates, have already increased output in response to the disruption of supply from Libya.
Hamli said secondary sources showed OPEC output had fallen by only 300,000 barrels per day last month, in line with figures in a Reuters survey for March output.
NO 2008 CRASH
Iraq’s Sharistani said he did not anticipate the oil price rally would be followed by a crash as happened in 2008.
Then prices reached an all-time high of nearly $150 a barrel in July before collapsing to less than $40 in December as a financial crisis sparked in the U.S. housing market led to recession.
The IEA’s Didier Houssin, head of energy markets and security, also said the market was very different from 2008.
In that record rally, OPEC spare capacity had slipped to less than 2 million barrels per day (bpd).
Now it has around 4 million bpd, Houssin said in Paris, which could be added if necessary, and inventories were comfortable although stocks were higher in the United States than in other developed consumer countries.
Hamli told reporters he was worried about events in North Africa and the Middle East, where a wave of popular protest has spread across oil-producing nations.
“We are worried, yes,” he said. “The rise in oil prices is a reflection of that.”
OPEC Secretary General Abdullah al-Badri had also been expected to attend the Paris conference, but sent a letter of apology saying current events had detained him at the OPEC secretariat in Vienna.
“Ongoing events in the Middle East and North Africa are such that I judge it inappropriate for me to absent myself from the organization’s headquarters in Vienna at this time,” he said.