Differences within OPEC on production increase… and few prospects to reach solutions for high prices

It seems that Chances are too less for Organization of Petroleum Exporting Countries (OPEC) to reach decision on increase production, during a meeting of small producers and consumers in Jeddah, in spite of the pressing claims by great consumers, especially with the emergence of differences within the organization on that issue.

Chakib Khalil the current president of OPEC, which includes 13 countries produce more than 38% of the world’s oil, said that there is no need to increase production at the present time, considering that the market is “balanced” and high prices “have nothing to do with market fundamentals.”
Khalil , Algerian oil minister, said “the position of OPEC is that we at this stage we need to study the market and we will meet in September for a decision.”
Khalil said there is no need to production increase while markets were balanced in September, emphasizing that “there is a problem in oil supplies.”
However, his Kuwaiti counterpart Mohammed Alim confirmed that “OPEC will not hesitate to increase any production if the market requires it.” However, Khalil said that “market fundamentals are not currently factor in raising prices”, pointing to other factors ; many speculations in the market and limited refineries and the dollar retreated and geopolitical conditions.”
Despite this position, Saudi Arabia has taken a single step to lift production to reassure customers, what irritated some members of OPEC, especially Iran. The Kingdom announced in May during the visit of American President George Bush to increase its production by 300 thousand barrels daily in June and then announced a few days ago lifted its production two hundred thousand additional barrels per day as of July for a total size of 9.65 million barrels a day.
Saudi Oil Minister Ali al-Naimi said that his country’s production capacity could rise to 15 million barrels a day.
He added: “There are concerns of insufficient supply in the long run, it seems to play a role in the price of futures contracts. I believe that these concerns are unwarranted, the world has enough oil resources capable of meeting the demand for long decades.”
Naimi stressed that “the price was about $ 65 a barrel a year ago, but now it is double that. If demand rose between one million and 800 thousand and 200 thousand barrels per day between the second quarter of the year 2007 and second quarter of the year 2008, the oil supplies had increased between one million and four hundred A million six hundred thousand barrels a day. ”
The Saudi minister said that there were “something other than supply and demand factors stand behind the” high price “simply focus on increasing supply will probably curb unchecked prices.”
He referred to “a wide range of factors can not influence the petroleum industry, high feed prices, and most notably weak stock and bond markets which will encourage investors to go to other commodities such as oil.”
Naimi and continued: “The stock and bond markets in the United States alone an estimated value of about fifty trillion dollars, and if it is decided to allocate half a percent of the nominal value of the commodity flow of oil result would be 250 billion dollars of funds and this will affect prices.” Naimi also attributed the high prices to “taxes and customs duties as unfair.”
AFP