Taiwan's oil suppliers said yesterday they would not raise oil prices despite pressure from a spike in spot prices for crude in reaction to the devastating terrorist attacks on the World Trade Center in New York and the Pentagon in Washington.
Executives from both state-run Chinese Petroleum Corp (
Chinese Petroleum executives said that while it would fulfill exports of petroleum products under concluded contracts, no new export deals would be signed for the time being.
Oil prices remained high in Asian afternoon trading yesterday on concerns of mounting tension in the Middle East after the deadly attacks in the US, according to dealers in Singapore.
Brent crude oil for spot delivery was fetching between US$30 and US$31 a barrel, they said.
It was trading around US$24 a barrel in London before terrorists struck at key buildings in New York and Washington.
But Chinese Petroleum executives said a commitment by OPEC on Tuesday to maintain sufficient supplies would provide stability in the near term.
The organization's General Secretary Ali Rodriquez said in a statement that OPEC member countries "are ready to use their surplus capacities if necessary," in order to insure "a sufficient supply to the markets" and the stability of prices.
An industry strategist in Singapore said prices were not about to break out into an upward spiral as OPEC would not want to be seen as beneficiaries of the terrorist action.
"OPEC members at this moment [are] committed to price stability and [don't] want to be seen to be taking advantage and they certainly do not want to be seen benefitting from terrorist acts," said the strategist.
On the other side of the world prices yesterday fell in London by US$0.66 after spiking Tuesday to US$31 per barrel.
"The move in oil prices [on Tuesday] was clearly a knee-jerk reaction to the news, but not an illogical one," said an oil expert with the GNI brokerage, Lawrence Eagles.
"The scale of the disaster was such that everyone expected a response from the US," he wrote in a research note.
However, according to Stratfor, a private think tank based in Texas, oil prices are likely to be impacted severely by a US response against the perpetrators of the attack which are widely suspected to have been of Middle Eastern origin.
"If the target turns out to be Iran or Iraq, however, the implications for what could become an outright war will radically shift the makeup of the oil market," according to analysis published on Stratfor's website.
"America's short-term response could shock prices to fresh highs in the near term, and the cost will be a mid-term recession that could probably trigger an oil price collapse," according to the industry think tank.
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