OPEC has lost control of prices: Indonesian OPEC governor

OPEC has lost control of prices: Indonesian OPEC governor

Vientiane, Laos (Platts)--26Jul2006

OPEC has lost control of oil prices, which earlier this month soared to
new record highs of more than $78/barrel, Indonesia's OPEC governor, Maizar
Rahman, said Wednesday.
Rahman, in the Laotian capital Vientiane for a meeting of the Association
of Southeast Asian Nations, said OPEC was "not comfortable" with currently
high and volatile oil prices. He said that while the producers' cartel had
previously been able to manage prices through production control, current high
prices were a consequence of negligible spare production capacity, tight
global refining capacity and geopolitics-driven fear of supply disruptions.
OPEC, Rahman said, was continuing to do its part by investing in capacity
expansion, and some of its members had also begun to invest in building new
refineries. Since 2002, OPEC has boosted production by some 4.5 million b/d
and is on course to achieve overall production capacity of 33 million b/d by
the end of this year, he said.
"With OPEC upstream capacity on course to rise to 33 million b/d by [the]
end of the year, against an expected average output of 28.6 million b/d for
the year, our spare capacity should exceed 10%, a level which past experience
has shown to be very comfortable for the market."
OPEC in January 2005 officially abandoned its $22-28/barrel target price
band for the OPEC basket of crudes and has yet to identify a new target price
or range. The 11-crude basket stood at $68.71/barrel Tuesday.

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http://www.platts.com/Oil/Resources/News%20Features/opec/index.xml

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