German Chancellor Gerhard Schroeder warned on a visit to Kuwait yesterday that world oil prices were too high and could endanger the world economy.
"The current prices are high which poses a danger to the world economy," he told reporters after delivering an address at Kuwait's Chamber of Commerce and Industry.
"It is in our interests that we see a fair price for oil on the international market," said Schroeder, who arrived in the emirate Monday on a two-day visit as part of a Gulf tour.
"Obviously we will be happy if an increase in production is possible. But in any case, there should be no talk about cutting production now. We need more transparency regarding oil prices" because that fuels speculation, he added.
"We have to settle this problem because prices are not only governed by supply and demand but also by speculation. This harms the interests of consuming and producing countries," said Schroeder.
After talks with Schroeder on Monday, Kuwait's Prime Minister Sheikh Sabah al-Ahmad al-Sabah said his country was "not happy to see oil prices reaching this [high] level."
OPEC president and Kuwaiti Energy Minister Sheikh Ahmad Fahd al-Sabah said he would propose maintaining the cartel's current production ceiling at its March 16 meeting but would urge consideration of an increase if prices continued to rise.
Crude futures dropped slightly but remained well above US$51 a barrel yesterday as cold weather in the US threatened to drive up consumption and exhaust already-thin heating oil supplies.
By late afternoon yesterday in Asia, the price of light, sweet crude for April delivery had slipped nine cents to US$51.66 a barrel on the New York Mercantile Exchange. Heating oil rose by less than a cent to US$1.4545 a gallon (3.8 liters).
Victor Shum, oil analyst at Texas-headquartered Purvin & Gertz in Singapore, said the weather was a short-term factor in driving up prices, and that a more critical factor will be whether the Organization of Petroleum Exporting Countries adjusts its output at a meeting March 16 in Iran.
"The likely consensus is that there'll be no change in production ceilings from OPEC," Shum said.
Al Sabah, who is also Kuwait's oil minister, said almost all members of OPEC agree that the cartel does not need to cut production.
However, Qatar Oil Minister Abdullah bin Hamad said on Sunday that OPEC might "cut supply to stop inventories from building" in the second quarter, when demand typically tapers off.
Shum said he expects prices to "remain between the high US$40s to the low US$50," until the March 16 meeting.
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