Peninsula - 24/4/2006

Crude prices in the world market will not stabilise at the current rate of $75 per barrel and a figure of “upper fifties to lower sixties” will be a more realistic figure, the Organisation of Petroleum Exporting Countries (Opec) President Dr Edmund Maduabebe Daukoru told The Peninsula yesterday.

Dr Daukoru, who is also Nigeria’s Minister of State for Petroleum Resources, said increasing output was not expected to lower the prices and would only serve to clog the market with additional supplies.

Dr Daukoru, who is in Doha to attend the 10th International Energy Forum said, the best solution for lowering oil prices from their current levels was to reduce conflicts. “ If we do the right things by lowering international tensions, oil prices will definitely stabilise,” he said.

He said, few economies in the world could make long-term business plans at the current rate of $75 per barrel. “The price now is on a spike,” he said, adding that gradually, it would drop to a more realistic and stable figure, that hovers between highs of $50 and lows of $60 a barrel.

The Opec president, earlier speaking to the media, blamed years of neglect in developing new capacities for the current situation, adding the imbroglio had no speedy solutions.

“The important thing is that we should begin now so that we do not continue with these kinds of problem beyond the next three years,” he added.

He said, while everyone concerned was making their own recommendations on how to remedy the situation and there was an urgent need to move from mere talking to action. “We should move from talking to actually make an improvement by talking about numbers of refining capacities that will come on stream within the shortest possible time,” he added.

More downstream capacity, he said, would ensure that any geopolitical tensions would not severely affect global oil prices to their current extent.

“When the capacity is tight, you get a wide fluctuation of prices up or down, depending upon the particular circumstances,” he said. Problems, he added, would continue to plague oil prices but adequate refining capacities would ensure these price swings are not drastic.