OPEC says oil prices don’t reflect group’s objective

AMSTERDAM (Bloomberg) -- OPEC, whose members produce more than 40 percent of the world’s oil, said current crude prices don’t reflect the group’s objectives.

The Organization of Petroleum Exporting Countries has a “duty” to supply the world with oil at stable prices, Mohamed al-Hamli, the group’s president, said yesterday at an oil conference in London. Al-Hamli is also the oil minister of the United Arab Emirates. If the market needs more oil, OPEC will supply it using its spare capacity of 3.5 million barrels a day, he said.

OPEC “recognizes it has a responsibility” to ensure “stable” prices for producers and consumers, he said in his speech. Al-Hamli said he doesn’t expect oil to reach $100 a barrel in the near future.

OPEC agreed last month to increase output by 500,000 barrels a day from Nov. 1 to help ease prices. That hasn’t prevented oil surging 20 percent since the group’s Sept. 11 meeting to reach a record $93.80 a barrel in New York Monday.

That increase “hasn’t worked” and a further 500,000 barrel-a-day wouldn’t help “cool” the market either, Al-Hamli said in an interview. More refineries are needed as the group is already doing what it can, he said.

The heads of state of OPEC members will meet in Riyadh on Nov. 17. There won’t be any decisions taken regarding oil supply at the meeting, Al-Hamli said. Still, ministers are likely to discuss the oil market during the summit, he said.

---------------------------- Riyadh, Abu Dhabi meetings

OPEC’s next meeting to set oil supply levels is scheduled for Dec. 5 in Abu Dhabi.

Speaking at the same conference in London, Qatari Energy Minister Abdullah bin Hamad al-Attiyah said OPEC shouldn’t be blamed for today’s oil prices. A “jump to oil” by speculators had pushed prices higher as refinery constraints caused a shortage of oil products, he said.

At the same time, OPEC stands ready to produce more oil to meet global demand, he said.

“If the market needs it, yes,” al-Attiyah said. “If the market needs more physical oil, not paper oil,” we will provide it, he said.

Shokri Ghanem, the top oil official of OPEC member Libya, said in London that there is a “big possibility” oil could reach $100.

------------------------- More OPEC oil

The world needs more OPEC oil and the group will probably discuss such a move later this year, said Luis Giusti, who formerly ran Venezuela’s state oil company and is now a board member of the London-based Center for Global Energy Studies.

“The fundamentals are still tight,” said Guy Caruso, head of the U.S.’s Energy Information Administration. “More barrels need to be produced.”

Qatar’s al-Attiyah said the oil market is “very confused” and the current oil price isn’t the result of an imbalance between supply and demand. OPEC, which will have to live with the weakening of the U.S. dollar, will discuss the market at its Dec. 5 meeting, he said.

Ecuador is back in OPEC and “we welcome them”, al-Hamli said. Ecuadorian president Rafael Correa said on Oct. 24 his country will rejoin OPEC at the producer group’s summit in Saudi Arabia next month.

Ecuador joined OPEC in 1973 then suspended its membership of its own accord in December 1992. Angola joined OPEC in January, becoming its 12th member. The formal readmission of Ecuador will bring the group’s membership to thirteen.

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