Exporting Countries (Opec) ministers meeting in the Qatari capital were warned yesterday that continued higher oil prices threatened global economic growth, which could trigger a collapse in demand for oil and hurt producer states.
At the same time, however, the ministers insisted they were powerless to halt the market-driven surge in prices.
“The market determines the oil price,” said Saudi Oil Minister Ali al-Naimi, Opec’s most influential voice. “You know and I know that the reason the price is where it is, is not from a shortage of (crude oil) supply,” he said.
The oil futures price, which eased slightly yesterday, raced to a record high above $75 last week as Iran continued to defy world pressure to halt its nuclear programme, a quarter of Nigeria’s output lay idle after rebel attacks and Iraq’s once considerable oil industry stayed mired in crisis.
Ministers in Doha were warned that record high prices could force a collapse in demand, which would hit producer states’ economies hardest.
Consuming nations, from top user the US to developing African nations, fear high energy costs will snuff out economic growth.
Opec says it is already pumping as much as refiners can handle, and investment in more refineries is essential to price stability. There was only muted support for a Kuwaiti proposal to offer up all of the group’s spare
2-million barrels a day, as happened last September, when prices spiked above $70.
Opec — which pumps 40% of the world’s oil — agreed to leave its output ceiling unchanged until it meets in Venezuela in five weeks’ time because there was no demand for extra crude at this time, oil ministers said.
“There is no demand for extra oil. There are no buyers, even for light crude,” al-Naimi said.
In September, as now, a lack of vehicle fuel in the US, consumer of more than 40% of the world’s petrol, was partly to blame for the price surge. At that time hurricanes had damaged US refineries.
Now the introduction of new, cleaner US petrol may disrupt supplies in the short term, Energy Secretary Sam Bodman said.
Libya’s top oil official said fear of a US strike on Iran, the world’s fourth-biggest crude exporter, had added $15 to the cost of a barrel of oil. Kuwait’s oil minister reckoned another $7 had been added by consumers’ sense of vulnerability.
Top exporter Saudi Arabia, a close US ally, also spoke of international tension.
“There is nothing that can be done about the tension that has been created and until that tension abates the price will continue to be high,” al-Naimi said.
Investors and analysts agreed Opec’s output was a near-maximum 28-million barrels a day, a third of the world’s supplies.
Consumers want greater access to oil and gas in the Middle East, Russia and Africa. Producers want to be sure investing in new fields will pay off.
Both sides criticise major oil companies for failing to build new refineries.
Opec members say they have raised oil output more than 10% since 1999.
Saudi Arabia alone will spend $50bn over the next five years on new fields and refineries.
Iranian Oil Minister Kazem Vaziri said Tehran was unconcerned by US opposition to international investment in its oil and gas reserves and that good progress was being made on planned projects.
When asked for his reaction to a proposed $7bn gas pipeline deal between Iran, Pakistan and India, the US’s Bodman said doing business with Iran encouraged its nuclear ambitions.
But Vaziri said his foreign investment partners were undeterred.
Vaziri said Iran’s nuclear programme would “save oil and gas that we are consuming and that will be available in the global market”.