Crude Oil: OPEC Predicts $200 per Barrel
By Chika Amanze-Nwachuku with agency report, 05.06.2008
The Organisation of Petroleum Exporting Countries (OPEC) has warned that the price of crude oil could reach $200 a barrel this year, as regular attacks on oil facilities in Nigeria, a weak US dollar and general concerns about the ability of supply to meet global demand have underpinned the market.
This is coming as the price of oil rose to a record high of $120 for the first time, driven by the crisis in the Niger Delta and northern Iraq.
According to a BBC report, US light sweet crude rose to a record of $120.21 a barrel in morning trading in New York before falling back to $120 – up $3.68 on the day.
And in reaction to the escalating oil price, the UK Prime Minister Gordon Brown has called for international pressure on OPEC, which supplies about 40 per cent of world's crude oil to bring oil prices down.
"Clearly oil prices are very high. Clearly also there needs to be some international effort with OPEC to get the oil price down," Brown said.
The British Prime Minister's comments on OPEC, the report said, were among the strongest he has made on the need for action by oil producers to reduce crude prices.
Brown sees the high cost of petrol and energy as one of the reasons for voter dissatisfaction with his government which led to the Labour Party suffering its worst local election defeat on record last Thursday.
Brown said it was not absolutely clear why the oil price had remained stubbornly high and was rising.
Demand for oil was lower because of lower growth in Europe and the US and lower growth in China than had been predicted at the start of the year, he said, adding: "So we've got to look very carefully at what is happening in OPEC and in oil prices and I think there is a strong case for putting pressure to see if we can get oil prices down".
However, the OPEC President Chakib Khelil, who is also the Algerian Oil Minister, has maintained that the falling value of the US dollar makes other assets, including oil, more attractive for foreign investors.
OPEC had at its last three meetings, rejected calls from the United States, world’s biggest consumer, Britain and other consumer nations to increase output quotas despite the rising price.
In its latest Monthly Oil Market Report released about a fortnight ago, the group stated that the U.S. economic slowdown may weaken oil consumption in the second quarter, even as it argued that factors beyond supply and demand were sending oil to all-time highs.
The 13-member organisation has continued to blame the rising oil prices on factors such as the weakness of the U.S. dollar, speculative trading and political tension and not because the market is under–supplied.
OPEC members comprise Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, Qatar, the United Arab Emirates and Venezuela. Its current output stands at about 32 million barrels per day.
AI
