OPEC president Chakib Khelil opposed increased production yesterday to counter record oil costs, saying "the price is disconnected from fundamentals" of supply and demand.
“We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply,” Khelil, the Algerian oil minister, told a briefing as an international summit on the oil price crisis started.
“Why would you have a supply problem when demand is going down?” he asked.
Khelil said the 13-nation OPEC group had decided no special meeting on production was needed now and that a decision would be made at a regular OPEC meeting in September.
Western consumer nations at the Jeddah summit want increased production, but OPEC countries say market “speculators” have played a key role in pushing up global prices.
“We believe speculation, in its noble and not noble terms, has its impact. Supply, demand and stocks are the only things we can measure,” the OPEC chief said.
Khelil refused to answer questions about why Saudi Arabia, the top world exporter and OPEC giant, has decided to increase production by another 200,000 barrels a day.
Khelil said that much of the price explosion can be explained by currency turmoil around the US dollar.
“A lot of people are talking about the uncertainties about the reserves. But what about the uncertainties on the dollar? We are here to discuss what makes the price behave the way it has behaved over the last year,” he said.
“OPEC’s position is that at this stage, we need to study the market and we will meet in September to make a decision,” he said.
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