OPEC is prepared to increase crude oil supply but only if it sees
physical demand for crude, which is not the case at the moment, Qatari oil
minister Abdullah al-Attiyah said Monday, blaming geopolitics and tight
refining capacity for record high oil prices.

"Today if we see any physical demand, we will do it," Attiyah told
reporters on the sidelines of a gas conference in Doha.

"We have to be sure that statistics show that the price is related to the
shortage of crude. I don't believe it," Attiyah said when asked to explain why
oil prices had risen to record levels. "With my contacts with our customers we
see there is no panic."

US light sweet crude oil futures soared to $93.20/barrel in Asian trade
Monday, setting a new record. Traders attributed the rise to tensions along
the Turkish-Iraqi border.

"I believe there is a big portion of today's oil prices that is related
to geopolitics, fear factors, and we cannot solve that. Sometimes we notice
that there is a shortage of products, not of crude oil, because of the
limitations of refining," said Attiyah.

The answer was to invest in new refineries, Attiyah said.

"My advice to all consumers and even producers is to invest more in
refineries. I also advise countries to give more incentive to investors in
refineries. We need refineries, we need more products. We need more products,
more than crude oil."

Asked if OPEC would raise production to counter the price spike, which
rose above $93/barrel for light sweet crude oil futures on Monday, Attiyah
replied: "What we see today is psychological, not physical. Today, if we see a
very physical demand we will do it."

Attiyah also ruled out abandoning the US dollar for oil sales, saying
this was not something that could be done overnight and was not on the agenda
for an OPEC summit due to be held in the Saudi capital Riyadh November 17/18.
But he admitted that it was having an impact on oil producers.

WEAK DOLLAR HURTS PRODUCERS

"Sure it will have an impact, a negative impact, because we sell our oil
and gas in dollars and the value of the dollar has dropped since last year
(by) nearly 40%. Big industrial countries are enjoying a big discount in oil
and gas because of the value of the dollar," he said.

The US dollar fell to a new record low Monday against the euro in Asian
trade. Several OPEC ministers have said there are no plans to switch away
from the weakening US greenback as the international oil currency.

A currency change might work if OPEC and non-OPEC producers sat down
together to discuss the matter.

"It is very difficult to jump to another currency. I think if all OPEC
and non-OPEC producers sit together and create another thought, another
basket, it might work, but today it cannot work alone," explained Attiyah.
"You can't say 'I want another currency'. It is not that easy."

IRAN SAYS OPEC NOT TO BLAME FOR HIGH OIL PRICES

OPEC's second biggest producer, Iran, has already switched the bulk of
its oil sales away from the dollar but for political rather than economic
reasons.

Iran's acting oil minister, Gholamhossein Nozari, was quoted Saturday as
saying OPEC was not to blame for record high oil prices because it is
producing practically at full capacity.

"OPEC's production accounts for 30% of the world market and it is the
non-OPEC members that have the main share of the market," the Persian-language
newspaper Iran quoted Nozari as saying.

"OPEC is not at fault. The West should not look to OPEC for the cause of
high oil prices," he said.

"There is no problem with regard to the supply of oil and OPEC is
producing at full capacity and its production is directly supplied to the
market," said Nozari. "This is while the non-OPEC oil producing countries
consume their own oil."

Asked if he was satisfied with oil prices, Nozari replied: "Not at all.
Despite the increase in prices, the producers gain nothing. The current oil
prices are not real."

Indonesian oil minister Purnomo Yusgiantoro Saturday played down
speculation OPEC members would increase production when they meet in Abu Dhabi
on December 5, saying there are no such plans.

"Not yet," Yusgiantoro said when asked whether the oil producers are
considering raising output beyond the agreed 500,000 b/d increase decided at
the last OPEC meeting and scheduled to come into effect November 1.

The Riyadh summit, which will be preceded by a ministerial meeting on
November 15, could become a consultative meeting to discuss current price
levels, but only if all member countries agree to it.

"It depends on a consensus from OPEC members, until (we are all) present
there (can be) no consensus," he said. "A consultative meeting (during the
summit) could happen, anything is always possible," he added.

Meanwhile, the office of Iran's President Mahmoud Ahmadinejad told Platts
Sunday that no decision has been made on whether the president will attend the
third OPEC summit in Saudi Arabia.

-- Geoff King, geoffrey_king@platts.com