OPEC Blames High Oil Price on Nigeria
By Fidelia Okwonu, 01.07.2008
The Organisation of Petroleum Exporting Countries (OPEC) has linked the Niger Delta crisis to rising crude oil prices, despite denials by Nigerian officials.
The latest rise in price had coincided with renewed violence in the Niger Delta on New Year’s Day in which 16 people were killed following attacks in Port Harcourt, Rivers State.
OPEC has also warned that the high price of oil would continue until the end of March 2008.
OPEC President and Algerian Energy and Mines Minister, Chakib Khelil, said at the weekend that the steady rise in prices was due to “escalating violence in Nigeria”.
Khelil also said two other factors were responsible – tension in Pakistan following the assassination of former Prime Minister, Benazir Bhutto, and a fall in oil inventories in the United States.
Algerian state news agency, APS, quoted Khelil as saying the world had sufficient oil supplies for now and no decision could be made to increase production before the next OPEC meeting in February.
“The surge in price will probably endure until the end of the first quarter of 2008, before stabilising during the second quarter," Khelil said on the sidelines of a conference on the security of hydrocarbon pipelines in the Algerian capital.
Khelil said a second quarter stabilisation was "probable".
On Wednesday, the price of a barrel of crude reached $100.09 in New York, before retreating at the close $99.18.
Khelil estimated that the oil market is currently "sufficiently supplied" but did not rule out an increase in production by the cartel at its next meeting in February.
That meeting will take place in Vienna on February 1. It will closely study predictions for world economic growth, notably in the US, which has been seriously affected by the credit squeeze from the sub-prime mortgage crisis.
"If a US economic recession takes hold, OPEC is not going to increase its current offering only to be called upon, later, to reduce it," he said.
OPEC, which currently produces 27.2 million barrels per day, accounts for about 40 per cent of world oil output, the rest coming from producers who are not part of the organisation.
At the last OPEC meeting, at Abu Dhabi on December 5, OPEC decided to leave its current level of production unchanged.
Meanwhile, the Saudi Oil Minister, Ali al-Naimi, said yesterday that the rise in oil prices to a record high had been determined by market forces.
“The market fixes the price of oil," Naimi told reporters at an energy conference in Riyadh when asked to comment on oil's surge to a record above $100 last week.
Naimi declined further comment on the price or what the OPEC would decide at its next meeting. Saudi Arabia is the world's largest oil exporter and the most influential voice in OPEC.
High energy costs have caused concern among some members of OPEC about the potential impact on the global economy. But ministers say there is little they can do to tame the price, which is driven by political tension and speculators and not supply and demand fundamentals.
Libya's top oil official, Shokri Ghanem, said last week that the producer group could do little about $100 oil as most members were already pumping flat out.
