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Opec piles on the pain

Opec piles on the pain

London: The weak dollar, lower diesel production and market speculation are the main reasons for dramatic rises in oil prices over recent days, according to Opec President Chakib Khelil. Speaking at a press conference  in Algiers at the weekend, the country's energy minister insisted that supply constraints are not behind recent oil price rises and said that Opec would not review production levels until in meets in Vienna on September 9th. By Friday oil prices were down by more than 5% on the $135 record set earlier in the week but still closed at just over $127 in New York.

The Opec president's comments fly in the face of recent oil industry analysis and come amid growing disquiet amongst European consumers who have mounted a series of increasingly belligerent protests in recent days. Oil experts say that demand is increasing so fast in key Asian economies that supply simply can't keep pace. "If China were to use the same amount of oil per person as Europeans, it would require an additional 36 million barrels per day, about the same as the oil production of four Saudi Arabia's," John Westwood, chairman of energy analyst Douglas-Westwood told delegates recently at the All Energy Conference in Aberdeen, Scotland.  

The "peak oil scenario" is approaching far more quickly than anybody expected, he said. And a number of key experts now believe that the world will never exceed its current level of production as new fields fail to compensate for declining ones. "Underlining this view are recently published statistics that suggest oil production from ten out of the top 13 international oil companies, including BP, Chevron, Total and Shell may has already passed its peak," he said. And whereas oil majors controlled about 80% of the world's oil reserves in 1970, the same percentage now lies in the hands of national oil companies. "In our view," Westwood concluded, "conventional energy supplies cannot meet demand and unless properly managed this could severely impact world economic growth."  [2/6/08]