Opec urged major oil consumers to curb speculative trading to stabilise crude prices and encourage producers to push ahead with projects to expand their output capacity.
Opec’s President Chakib Khelil, who is Algeria’s Oil Minister, said speculation is one of the key factors that have sharply pushed up crude prices over the past few months.
“There is a consensus that the current price includes a significant share [up to one third according to several analyses] due to non-market fundamentals,” Khelil said in a statement published by the Riyadh-based International Energy Forum.
“Indeed, if one third of the current price level is due to factors other than supply and demand, there is clearly room for producers and consumers to join forces to reduce volatility, through better regulation of the speculative activities, increasing predictability,etc.
“Opec has been calling for such efforts through dialogues with various parties within the oil importing world and with other oil and gas producers.”
Khelil said the surge in crude prices above $100 a barrel marked what he called a milestone in the oil history. But he noted that the average price of around $70 in 2007 remained lower than the average price in 1981 in real terms.
“This new development stirred debate all over the world, in oil exporting and importing countries, regarding its causes, sustainability and implications for both parties. Indeed, whereas some perceive it as cause for alarm, others look at it as though it was a mere short-lived spike,” he said.
Khelil said the price surge, which has fetched Opec record earnings over the past few years, has produced interesting observations:
- The yearly average price for 2007 was still lower than the highs reached in the 1980’s;
- The global economy has shown, over the last few years, a genuine resilience to this upward oil price path;
- The positive implications in terms of a more efficient use of a finite energy resource, less carbon emissions and a highly stimulating booster for the promotion of renewable energy sources, on the long transition road to a new economy.
“From these observations, we can draw some conclusions regarding the challenges that the ongoing global energy trends raise for producers and consumers, but more importantly the multiple opportunities they offers for all stakeholders,” he said.
“There is evidence today that the relatively slow expansion of the petroleum industry over recent years was to a great extent a result of the divestment in human capital over the previous two decades that followed the price collapse of the mid eighties,” he added.
“Industry should meet the challenge of balancing short term benefits of cost cutting, with the long-term reward of a strong comparative advantage of investment in human resources, when opportunities are offered by expanding global energy needs.”
Opec cautions speculators