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20 April 2024

Hike won't necessarily tame oil price: OPEC president

By Agencies


A decision to hike output at next month's OPEC meeting wouldn't necessarily tame the oil market because prices are being determined by factors other than supply and demand, OPEC's president said on Wednesday.

Chakib Khelil, who is also Algeria's Energy and Mines Minister, added in remarks to reporters that there was no point producing more oil if there was no real demand for more supply.

Producing more "won't necessarily lower prices because prices are controlled by other factors which have nothing to do with supply and demand."

President George W. Bush on Wednesday called for the Organization of the Petroleum Exporting Countries to agree to increase supplies at its February 1 meeting in Vienna.

Bush said he hoped OPEC would be encouraged to boost output after he held talks with King Abdullah of Saudi Arabia on a trip to the Middle East.

Khelil said the producer group would debate the issues thoroughly at the meeting in Vienna and take a decision based on consensus.

Asked what OPEC would decide, Khelil replied: "We don't know. It's the consensus that will decide it. It depends on the exchange of points of view."

"It's true that there is reduction in stocks -- stocks are below the average of the last four years. But some will say it's not necessary to raise supply, because demand in the second quarter will fall. If we help the stocks to rebuild to a reasonable level, there's not really a need to raise our output."

"Others will say that with the economic situation -- if the US crisis spreads to other countries -- demand could fall, so why produce more oil if demand declines?" 

"That's the sort of debate we'll have around that table. But if there is not truly a real demand (for more oil) on the market, there is no reason to produce more," he said.

Khelil said prices were being determined by a lack of refinery capacity, production problems in some producer countries for technical or political reasons, geopolitical problems in certain regions and the fall of the dollar which had attracted speculators to the oil market.