Crude oil prices soared to $100 a barrel Jan. 2, for the first time, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will outstrip supplies. Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher.
Jump won’t affect OPEC meeting date
The Organization of Petroleum Exporting Countries is expected to hold its next meeting as scheduled on Feb. 1 despite crude prices hitting a nominal high of $100 a barrel in New York Wednesday night, group officials said Thursday, Jan. 3.
OPEC, whose output meets about 40 percent of the 86 million barrels consumed daily worldwide, can’t react to daily crude oil price swings but will study market developments closely throughout January, the officials said.
“OPEC isn’t geared to act on daily price movements,” Javad Yarjani, the Iranian oil ministry’s head of the OPEC affairs department, told Dow Jones Newswires in a phone interview from Tehran.
“We still have almost one month and will then have a better understanding of the fundamentals,” Yarjani said.
Other OPEC officials have struck a similar note.
“The market is very sensitive right now, and OPEC will be monitoring the situation very closely in the coming weeks ahead of its Feb. 1 meeting,” Falah Al Amery, head of Iraq’s 13-nation State Oil Marketing Organization, or SOMO, told Dow Jones Newswires in a phone interview.
“But the bottom line remains that if we find that the reason behind high oil prices is speculation and not demand and supply levels, then there will not be an (output) increase,” he added.
Al Amery said that 2008 “will most likely see oil prices continue to hover around the $100 a barrel level,” and could cross it if geopolitical tension in the region intensifies.
Two camps in OPEC
Al Amery said there are two camps within OPEC with differing opinions about price levels.
“You have the hard-liners who are happy with a $100 per barrel price level, and you have the moderate member countries who understand it is bad for the world economy and would like to see prices fall back to the range of $70 to $80 a barrel,” he said.
In 2008, “member countries must live with this volatility of price,” OPEC Secretary General told Dow Jones Newswires in a recent interview.
“We hope 2008 will be a more successful year in terms of stability for us, not in terms of prices,” he added.
In early December, OPEC rebuffed calls from oil-consuming nations for another output increase after agreeing on a production increase of 500,000 barrels a day in September that took effect Nov. 1.
OPEC has expressed concerns about world economic growth in the aftermath of the unfolding U.S. subprime mortgage crisis and its impact on oil demand.
—The Associated Press
