Beijing: World oil markets are well supplied, but dollar weakness and a flood of speculative investment have helped push prices up to record levels, Opec (Organization of the Petroleum Exporting Countries) secretary general Abdullah al-Badri said on Thursday.
The Opec official told reporters that $90 (Rs3,555) a barrel of oil was not bringing a windfall to the organization, which is investing heavily in new production and seeing revenues eroded by the weak dollar.
“There is no interruption of supply, there’s a lot of oil in the market,” he said. “The geopolitical situation, the value of the dollar, refining bottlenecks and speculators investing heavily in oil markets. That is why prices are reaching that high,” al-Badri added.
He also said that a weak dollar and rising costs were limiting producing nations’ profits. “Because of the value of the US dollar, the cost of equipment, the cost of producing a barrel of oil and the cost of investment, it is not really a bonanza for us, $90 a barrel,” al-Badri said.
Opec wanted “reasonable” prices, he said, but declined to set a price band. Al-Badri said producers were already working on a 500,000 barrel per day (bpd) increase in production, due 1 November, because of the lead-in time needed.
“I am sure the companies are preparing themselves for this...when you increase or decrease, it is not that easy.”
He declined to comment on one senior Opec delegate’s view that the organization needed to add another 500,000bpd next month, to tame prices that last week broke the $90 per barrel barrier for the first time. But he said output would not be on the main agenda for an Opec heads of state meeting in Riyadh on 11-12 November.
“The November meeting will be dedicated to the summit, not to the market,” he said.