The world's oil producers and consumers agreed yesterday that record US$75-a-barrel crude was a danger to everyone, but appeared further apart than ever in their quest to bring prices down.
Oil prices raced to an all-time high last week as Iran continued to defy world pressure to halt its nuclear program, a quarter of Nigeria's output lay idle after rebel attacks and Iraq's once considerable oil industry was mired in crisis.
Consuming nations are afraid high energy costs will drive up inflation and cut growth. Producers fear a collapse in oil demand.
PHOTO: AP
On Friday in New York, the G7 industrialized powers warned after a meeting that the global economy was now under threat.
They insisted it was "crucial" for producers to boost investment in production infrastructure.
British Chancellor of the Exchequer Gordon Brown said that when OPEC holds a ministerial meeting on June 1 "it must look at its production quotas and it must look at both how we can increase output and refining capacity."
But on Saturday OPEC representative Adnan Shihab-Eldin, in a statement to IMF policymakers, bluntly reminded consumers that "the need for appropriate investment is not confined to the upstream [producing] sector but also extends along the entire supply chain, particularly in the downstream [refining] sector."
He maintained that oil supply would remain tight in consuming countries "especially if the necessary investment in the refining sector is not undertaken in a timely manner."
There are splits over how to pull prices away from their inflation-adjusted high of above US$80, touched in 1980, the year after the Iranian revolution. Consumers want more oil. Producers want to be sure investing in new fields will pay off.
"The two are moving in parallel but there is no meeting point," OPEC President Edmund Daukoru told reporters on the second day of talks at the International Energy Forum yesterday.
The meeting brings together ministers from 65 countries, including the US and members of OPEC.
Senior executives from 32 oil companies were also there.
"There is a need to coordinate more," Algerian Energy and Mining Minister Chakib Khelil said. "We are not getting a lot of feedback from companies, they are not talking."
Irked OPEC members point out that they have increased oil output by more than 10 percent over the past six years.
Now producers want consumers to come clean on their energy plans. They note that US President George W. Bush has made it his goal to kick the US' addiction to oil and US Energy Secretary Sam Bodman has said that he hopes for a rebirth of nuclear power.
Some OPEC delegates say that US foreign policy is partly responsible for the current record prices.
Increasingly strident exchanges between the US and Iran over the Islamic republic's nuclear program have raised fears that the world's fourth biggest oil exporter may halt flows, or be forced to do so by international sanctions.
The US slapped a unilateral ban on Iran's oil in the mid-1990s, but Europe and Asia remain customers.
Other producers blame a lack of planning in consumer nations, particularly the US, which uses a quarter of the world's oil and over 40 percent of its gasoline but has not built a new refinery on its soil for decades.
But experts caution that the impact of new refineries will only be felt in the long term.
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