Kuwait defends Opec, blames West for high fuel prices

Kuwait lashed out at Western oil consuming nations yesterday for high fuel costs and staunchly defended Opec's efforts to calm soaraway crude prices.

Opec had been unfairly blamed for high prices while consuming nations had been quietly reaping most of the reward through high taxation, Kuwaiti Oil Minister Sheikh Saud Nasser Al Sabah told an annual oil and gas conference in London.

British fuel protesters held a demonstration yesterday in London and Edinburgh in a much trumpeted drive to persuade the government to lower fuel taxes.

European countries including Britain have faced widespread protests in recent times over high fuel prices blamed on heavy duties levied on the commodity by their governments.

Al Sabah blamed western nations for the continued high fuel prices. "Let these nations review high tax policy on oil products," he said, adding "Why have governments from some consuming nations made at least three times the amount made by producers (from high crude oil prices)?" "These consuming countries bear most of the blame for high oil and product prices. We've been getting all the blame while the rest have been making all the money."

Opec had done what it could to restore stability to world oil markets but some consuming countries are making "three times the amount made by producers" and must shoulder most of the blame, said Al Sabah.

Opec agreed on Monday to leave crude oil output unchanged for the moment. The group has hiked output by 3.7 million barrels per day (bpd) so far this year in a bid to calm overheated oil prices which recently hit 10 year highs.

"We (Opec) have done our part to restore stability to the market and to oil prices. Now let market forces dictate prices," Al Sabah said. "We have to wait and see until the first quarter how the market is."

Ged Davis, Vice President of Global Business Environment for Shell International said at the same conference that world oil markets had become so complex to read that it was becoming impossible to control prices and Opec, now in its 41st year, was slow to meet market demands.

"The market moves in minutes...Opec makes decisions in months," Davies said. Instead of bringing prices under control with production increases, Davies said that Opec managed to create volatility in the marketplace.

"Opec is de facto a manager not of oil prices but of medium-term volatility in the market," he said. He added the market would likely see acceleration followed by potential braking, leading to oil price volatility.

Al Sabah said most Opec countries were pumping at or close to their maximum capacity, the Kuwaiti minister said. "A few, if not all, Opec countries have reached maximum capacity level" he said, adding that Kuwait was among the nations unable to produce any more crude oil beyond its current 2.1 to 2.2 million bpd.

"We do have some technical problems with (the construction of) certain gathering centres," he said. When that is resolved the medium-sized middle eastern producer will be able to pump an extra 300,000 to 400,000 bpd.

"As we speak today we in Kuwait have reached maximum capacity," he said. On Friday Saudi Arabia hosts an oil producer and consumer conference. It will be the sixth in a series of dialogues between producing and consuming nations first established by France and Venezuela after the 1991 Gulf War.