Kuwaiti oil minister says high oil price not due to supply/demand

Kuwait City (Platts)--2Apr2006

Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah said Sunday that high oil
prices were not a result of supply/demand fundamentals but geopolitical
concerns. He also said in a statement to official news agency KUNA that while
OPEC did not have a "preferred" oil price, crude prices should be at levels
that did not harm the world economy but at the same time should meet the
demands of upstream and downstream capacity expansion plans.
"There is no firm number for what constitutes a fair oil price because
the factors that are affecting the price are outside the context of supply and
demand fundamentals," the Kuwaiti minister said.
Sheikh Ahmed noted that oil producers were currently investing large
amounts of money to expand crude oil production and refining capacity and
prices should therefore be "at a level that would conform with these
investment costs." But he added that prices should not be so high as to hamper
world economic growth.
"The oil price should be a help and not an obstacle to world economic
growth," Sheikh Ahmed said. He added that developing countries in particular
were very vulnerable to high oil prices.

 

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