Rodriguez speaks, and there is a lot of truth in what he has to say.
OPEC President Says Oil Prices to Rise Further
CARACAS, Aug 31 (Reuters via energy24.com) - The OPEC cartel president says he expects world oil prices, already at their highest level in a decade, to continue rising even after oil producers hike supply again next month.
Venezuela's Ali Rodriguez blamed sizzling prices on excessive speculation at futures exchanges in New York and London, high taxes imposed by consumer governments and low investment in oil refineries in the West.
"I am convinced that if we increase production in September, prices will keep rising," he told a radio interviewer. "Most analysts agree that prices could surpass $40 per barrel by the end of the year if consuming countries do not help us to stabilize prices," he added.
The United States and Europe have both lobbied the 11-member cartel to loosen restrictions further at its next meeting in Vienna on September 10, but Rodriguez insisted consumer nations must play their part.
"It is not enough for OPEC to continue fulfilling its side of the bargain in the search for price stability; consuming nations must do their bit," he said.
Two thirds of the price of gasoline paid by motorists in Europe goes to their own governments in tax, for example, while only 12 per cent reaches the oil producer.
"Refined product inventories are the problem, not crude oil stocks," said Rodriguez, who is also Venezuelan Energy and Mines Minister. "If we add a lot of crude oil barrels, inventories will rise dramatically and next year there will be a price crash," he added.
Deep discounting for physical crude oil by some oil exporters, despite high futures prices, showed that there was little real demand for more OPEC barrels. For every barrel of real oil produced in the world, two "virtual barrels" change hands on the financial markets in the form of futures contracts, which Rodriguez said distorted the price dangerously.
Nevertheless, if prices stay at these levels, as expected, then OPEC will implement its price target mechanism and add an extra 500,000 barrels per day, Rodriguez said. |
