Abu Dhabi/London: Opec signalled on Monday it would not boost oil output even as prices approached $100 (Dh367) per barrel and as the group forecast higher global demand for its oil in 2011.
The reluctance of the Organisation of Petroleum Exporting Countries to add supplies is of growing concern for consumer countries worried about the impact of rising commodity costs on inflation and economic recovery.
Yesterday, Mohammad Bin Dha'en Al Hameli, the UAE Minister of Energy, said he was not concerned by rising prices, echoing recent comments by Opec producers Iran and Venezuela. Algeria's oil minister also said the oil market was balanced.
Alarming
Brent crude oil was trading near $98 a barrel yesterday, within sight of a 27-month high. US crude was trading around $91 a barrel.
The head of the International Energy Agency, an adviser to 28 industrialised countries, described the current oil price as "alarming" and warned it could be damaging.
"We are concerned about the speed of the rising oil price, which can harm the growth of economies," Nobuo Tanaka, executive director of the agency, said.
"If the current price continues, it will have a negative impact."
The Opec comments will leave consumer countries wondering whether Saudi Arabia is prepared to take action to prevent prices escalating further. Saudi Arabia, Kuwait and the UAE hold most of Opec's unused production capacity. Riyadh has yet to comment on the rising oil price, and industry sources say there is no sign that the kingdom is shipping more oil to customers — as it has in the past when it felt the market was rising too fast.
A recovering world economy boosted world oil demand much more than analysts expected in 2010.
Opec released its monthly report on oil supply and demand yesterday and predicted another rise in demand this year.
The report from Opec's Vienna headquarters said the 12 Opec members will need to pump 29.4 million barrels per day (bpd) — 160,000 bpd more than expected — on average this year to balance the market.
- $98: price of Brent crude yesterday
- 29.4m: bpd production needed to balance market
No early meeting
Current oil prices reflect market conditions and there is no need for an emergency Opec meeting to discuss the rise, Mohammad Bin Dha'en Al Hameli, the UAE Minister of Energy, said yesterday.
"There is no shortage of oil, the market is well supplied. We're monitoring the market very closely," Al Hameli told reporters on the sidelines of an energy forum in Abu Dhabi.
"We're seeing gradual economic recovery ... positive signs of economic recovery. We need to see whether this is sustained." Asked whether Opec would hold an emergency meeting to discuss the issue, he said: "Nothing has come to me so far."
