OPEC's Barkindo reiterates high oil prices due to geopolitics

OPEC's Barkindo reiterates high oil prices due to geopolitics

Caracas (Platts)--30May2006

OPEC's acting secretary general Mohammed Barkindo Tuesday blamed current
high oil prices on geopolitical tensions, but said at the same time that the
high levels were not having a negative impact on world economic growth and
demand for oil.

"There is no impact of the current oil price on growth," Barkindo said.
"There is no evidence yet of a slowdown," he said, adding that the economy of
the US, the world's biggest oil consumer, continued to "zoom" ahead, while
"China and India have defied the prophets of doom."

Barkindo, speaking in Caracas ahead of Thursday's meeting of the oil
cartel, was asked to identify a price level that might trigger a negative
impact on growth. "It's difficult to say," he said. We're just concerned for
this robust growth to continue," he said, adding: "It's a concern to OPEC and
[other] producers."

Also of concern, he said, was the current geopolitical situation which he
said was "outside the realm of OPEC." He did not specify particular issues,
but markets have been concerned that any escalation of Iran's nuclear dispute
with the international community could lead to Iranian oil exports being
disrupted.

GEOPOLITICAL CONCERNS

"The current inflamed price is due to geopolitical concerns," Barkindo
said. "We're calling on world leaders to give it more attention."

Asked to comment on official US forecasts of an "active" hurricane
season, Barkindo said: "I hope that the forecasts that the meteorologists have
given are wrong."

Some 12% of US Gulf of Mexico production remains shut in after last
year's devastating Hurricanes Rita and Katrina.

Oil prices moved higher Tuesday alongside on robust Chinese demand oil
figures and with an eye on the OPEC meeting, which is expected to keep crude
output levels, set officially at 28 million b/d, unchanged. North Sea Brent
rose to within a whisker of $72/barrel, while US light crude futures in New
York opened 95 cents higher at $72.32/barrel as the US dollar drifted lower,
causing metals and energies markets to surge.

Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah, who will not attend the
Caracas OPEC meeting, said his country wanted the group "to continue with the
same production level just to show the market that the security of supply will
continue and try to bring the prices to a more stable level."

UAE oil minister Mohammad Dhaen al-Hamli, expected in Caracas later
Tuesday, said OPEC would maintain its current production levels, even though
there was no shortage of crude oil in the market, because oil prices remained
high and were expected to continue high this year.

Bullish factors still outweigh bearish signals in the oil market, with
geopolitics still at the center stage. Nigeria's Niger Delta strife is still
festering and no resolution is in sight to the row over Iran's nuclear plans.

Coinciding with OPEC's meeting Thursday, the five permanent members of
the UN Security Council plus Germany are to meet in Vienna to discuss Iran's
nuclear program, AFP quoted a Chinese foreign ministry spokesman as saying
Tuesday. Tehran, for its part, is sticking to its refusal to halt sensitive
uranium enrichment work.

Iran would study European proposals to end the crisis, the foreign
ministry in Tehran said Tuesday, but added that none had been received so far.

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