OPEC powerless to bring oil price down: senior delegate

OPEC powerless to bring oil price down: senior delegate

London (Platts)--14Jul2006

Oil producers' cartel OPEC is powerless to bring down oil prices, which
earlier Friday smashed through previous records to hit new all-time highs
above $78/barrel, a senior OPEC delegate said.
Prices are "going high in the futures market, it has nothing to do with
the availability of crude," the delegate said. "OPEC is not the reason for it
so they cannot do anything."
Geopolitics moved back to the center stage of world oil markets Thursday
as Israeli jets launched a series of air strikes on Lebanon in retaliation for
the abduction of two Israeli servicemen by Iranian-backed Hezbollah
guerrillas.
The bombing, which has cut off Beirut airport and has closed the highway
linking Beirut and the Syrian capital Damascus, has continued into Friday. The
Israelis have also imposed a sea blockade on Lebanon.
US light crude futures, which closed Thursday in New York at
$76.70/barrel, soared to $78.40/barrel on the Access electronic system, while
North Sea Brent, which had settled at $76.69/barrel Thursday, rocketed to
$78.03/barrel.
Apart from Saudi Arabia, which says there is no demand from customers for
its heavier crude grades, OPEC producers have been producing almost flat out
for the past few months alongside gravity-defying high oil prices.
The generally-accepted wisdom among producers and the world's leading
consumer countries is that there is no shortage of crude, and that the high
prices are due to a combination of factors, including geopolitics, limited
refining capacity, and the currently thin cushion of surplus production
capacity.
The International Energy Agency estimates the total volume of current
spare capacity at just 2 million b/d.
Until earlier this week, the geopolitical concerns had been focused
mainly on the dispute between Iran and the international community over
Tehran's nuclear program.
Iran has refused to respond before August 22 to a package of incentives
presented last month by the US, UK, France, Germany, China and Russia and
aimed at persuading Tehran to freeze its uranium enrichment program.
At talks in Paris earlier this week, foreign ministers from the six
countries said they had no choice but to refer Iran back to the United Nations
Security Council, a move that could pave the way for economic and diplomatic
sanctions.
Iran, which exported 2.4 million b/d of crude in the Iranian year to
March 2006, has not ruled out using oil as a weapon in the nuclear dispute,
and oil markets are worried about the potential for Iranian exports to be
disrupted in the event of the dispute escalating.

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