OPEC President: No Need For More Crude Oil

LONDON, April 8, 2008 (Dow Jones Newswires)

OPEC President Chakib Khelil said Tuesday the producer group has no plans to increase oil supply to tame prices that are flirting again with record highs, pinning high prices on a weaker U.S. dollar and financial speculators, not a shortage of supply.

"The supply is there. We are (now) entering a period of lower demand...demand this year is going to be lower than expected," Khelil told reporters after being asked whether the Organization of Petroleum Exporting Countries might raise production.

Khelil, who is also Algeria's oil minister, placed the blame for the current $100 a barrel oil prices on a weak U.S. economy that was undermining the U.S. dollar, which was giving financial speculators room to bid oil prices higher.

"I think everyone agrees that the major concern is the economic crisis in the U.S. and the downfall of the U.S. dollar and its impact on the oil price," he said, adding he believed financial speculators were the driving force pushing oil prices higher.

Several analysts in recent days, however, have said the role of speculators wasn't a big factor in recent high prices, noting speculators have actually been reducing their exposure to the oil market.

OPEC is scheduled to hold its next output policy meeting in September, though it has been suggested the group could meet informally later this month on the sidelines of a producer-consumer meeting in Rome to discuss oil market developments.

"There's a possibility that OPEC will informally meet (in Rome)," Khelil said, adding though the probability of that happening was low.

Khelil also defended resource nationalism - a term usually associated with national governments strong-arming foreign energy companies into agreeing to less beneficial contractual terms, like higher taxes and a lower share of oil profits.

Khelil didn't spell out what he meant by resource nationalism, but said as long as national oil companies and international firms find ways of cooperating, "resource nationalism is completely compatible with a well-functioning global oil market.

"It can be a win-win situation" he told an oil conference here, adding recent discussions in oil consuming nations about resource nationalism "had not been very kind" to oil producers. He argued producers had every right to pursue their own national interests and utilize their oil and gas resources in whatever way they choose.

Khelil's comments on oil supplies echoed the remarks of OPEC Secretary General Abdullah al-Badri earlier this week, who said during a visit to Iran that, "at the moment there is enough oil in the market and no need to change OPEC's output," according to AFP.

U.S. Energy Secretary Samuel Bodman in Washington Monday said OPEC has so far disregarded repeated requests to increase production but added he remained "optimistic" the 13-member producer group would heed his calls.

LONDON, April 8, 2008 (Dow Jones Newswires)