ROME (AFP) — Oil prices, which surged to record 117.40 dollars a barrel on Monday, are unlikely to fall back below 90 dollars, the Venezuelan energy minister Rafael Ramirez said here.
"We believe that prices will remain around this level, at least around 90 dollars," Ramirez told reporters on the sidelines of the International Energy Forum here.
"Oil prices can't fall" much further because "production costs have increased," he said.
Oil prices would only begin to weigh on demand once they had reached a certain level, but that level had not yet been reached, the minister said.
Iraqi oil minister Hussain Al-Shahristani argued that an increase in production by the Organisation of Petroleum Exporting Countries (OPEC) would not bring the relief the market was calling for, since prices were being driven primarily by speculation.
"There isn't much OPEC can do," the minister told reporters.
"OPEC is producing as much as the market requires. As a matter of fact there's some surplus on the market."
An increase in output "is not going to solve the situation. The solution is in the hands of the speculators. They're the ones who are fixing the price and not the producers," Al-Shahristani said.
Qatar minister Abdullah bin Hamad al Attiyah insisted that he did not like the fact that oil prices were so high.
"I am not enjoying the high prices. Who does?" he asked, adding: "The market is very confused. We are facing a lot of difficulties, not only the oil prices, but also the huge costs" of maintaing or increasing production.
Among the cost factors were the weak dollar, high inflation, rig costs and shortage of skilled labour, which were all delaying some projects, he argued.
Venezuelan energy minister Ramirez was asked about the nationalisation dispute between between his country's national oil company PDVSA and US giant ExxonMobil.
But he refused to be drawn, noting that the international arbitration process had not yet started and would likely take some time.
Asked about biofuels, Ramirez said that biofuels would have only a minimum impact on the oil markets, "but look at the impact has had on food prices. It's madness."
"All the countries of Latin America have been hit by the surge in food prices," he added.
Turning to Venezuela's plans to impose new tax on oil profits, he said that Caracas was pencilling in additional revenues of around nine billion dollars.
Earlier this month, Venezuela's congress approved a "special contribution" from oil companies operating in Venezuela amid soaring oil prices.
The new "mandatory contribution" will be levied only on income over 70 dollars a barrel and the revenue will go to the National Fund for Development.
Most of it will be paid by PDVSA, since foriegn companies produce only around 300,000 barrels of oil per day in Venezuela out of a total of 2.8 million barrels, Ramirez pointed out.
Finally, quizzed about billing oil in euros rather than dollar so as to protect producers against the declining dollar, Ramirez said that the issue would continue to be discussed within OPEC.
Last month, Venezuela said it would sell some of its oil in euros to help offset the economic impact of the falling US dollar.
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