OPEC sees no oil shortage

Oil has risen from below $20 a barrel in early 2002

World oil markets have enough supply now, but Opec is willing to pump more if needed to keep pace with demand, the group's secretary-general said today.

Adbullah al-Badri also said in a statement that the 13-member Organisation of the Petroleum Exporting Countries (Opec) holds more than three million barrels per day of spare production capacity for use if needed. "There is clearly no shortage of oil in the market," the statement quoted him as saying. "The Organisation stands ready to act if the market shows a need for any further measures," he added.

The statement comes a day after crude oil prices hit a record high of $123.93 a barrel and a renewed call from the US, the world's top oil consumer, for more oil from Opec to quell the rally in prices. Oil prices fell almost $2 after the statement was released, even though it underscored Opec's view that factors other than supply and demand are lifting prices and there was no need for an immediate boost in supply.

"The turmoil in some global equity markets and the considerable depreciation in the US dollar have encouraged investors to seek better returns in commodities, particularly in the crude oil futures market," Badri said. "This has driven prices higher. The Organisation will continue to strive for a stable and balanced market, with prices that reflect fundamentals, and are favourable to both producers and consumers."

The record-high price of oil, which analysts including Goldman Sachs expect will continue to rise, is causing alarm for consumer countries worried about their economies. A senior White House official said yesterday that President George W. Bush during his visit to Saudi Arabia next week will again ask Opec to increase oil production.

Saudi Arabia is the only Opec member able to raise production significantly at short notice. But Badri said some Opec countries were not finding demand for extra barrels. "Crude oil movements indicate that some nember-countries are unable to find buyers for their additional supply," he said.

Opec, source of two in every five barrels of oil, boosted production by a modest 500 000 bpd at a meeting in September but rebuffed consumer calls to pump more at gatherings in December, February and March. The group is next scheduled to meet to decide output policy on September 9 at its headquarters in Vienna. - Reuters