OPEC president Purnomo Yus-giantoro blamed a "political premium" of US$10-US$15 a barrel for soaring oil prices yesterday, saying the oil cartel is exceeding its supply quotas but the market is not responding.
Purnomo said OPEC was concerned about the high oil prices but exceptional circumstances restricted its room to maneuvre on the issue.
PHOTO: AP
"According to our view based on the fundamentals -- supply and demand values -- the price should not be as high as what we see today," he told reporters at the 19th World Energy Congress in Sydney.
"What we see is a political premium between 10-15 dollars per barrel," he said.
Purnomo, who is also Indonesia's energy minister, expects prices to fall from current levels of more than US$40 by the end of the year, based on contracts exchanged on oil futures markets.
In Asian trade yesterday, oil prices continued to weaken as concerns over the possible impact of Hurricane Frances on the southern US states which are home to major oil production and refinery facilities faded.
In early afternoon deals, New York's reference contract, light sweet crude for October delivery was at US$43.22 a barrel, down slightly from the US$43.31 close on Tuesday.
Purnomo also said the OPEC was likely to change its target band of US$22 to US$28 dollars a barrel at a meeting in Vienna on Sept. 15.
He refused to comment on where the revised band might be set but said it would reflect the impact of inflation and depreciation of the US dollar since the current target band was set in 2000.
Meanwhile, IMF Managing Director Rodrigo de Rato said he doesn't expect oil prices, which rose to a record last month, to fall back soon to a range of between $25 to $28 a barrel.
"There are some important structural changes that will keep the price in a certain range," de Rato said in an interview with Bloomberg while traveling from Johannesburg to Ouagadougou, the capital of Burkina Faso.
"Certainly the price that was set in most budgets of $25 to $28 per barrel is gone, so countries are going to revise that," he said.
"Supply is not rigid, but there is very little flexibility," de Rato said.
"Oil-consuming countries need to rethink their policies. There is a structural change in the energy situation because there is much stronger demand in most countries," he said.
Demand for the fuel is rising in countries ranging from South Africa to the UK and the US, he said.
"The central bank in South Africa sees that South Africa is consuming more oil," de Rato said. "The UK is for the first time a net importer and the US is using more oil."
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