Oil prices rise as OPEC president questions investment flows
NEW YORK (AFP) — Oil prices swung back towards record highs on Tuesday after the president of OPEC said there was uncertainty surrounding future investment in energy facilities that could boost crude output.
The International Energy Agency (IEA) meanwhile said that growth in supply would outpace demand until 2010, after which the oil market would likely experience supply tensions.
New York's main oil futures contract, light sweet crude for August delivery, closed up 97 cents at a record close of 140.97 dollars a barrel. The contract had struck a historic peak of 143.67 dollars on Monday.
Brent North Sea oil for August delivery settled up 84 cents at an all-time settlement high of 140.67 dollars, after striking a record trading peak of 143.91 dollars on Monday.
OPEC president Chakib Khelil, speaking at a conference in Madrid, said the oil producers' cartel was concerned about future demand.
"The concern we have is about the security of demand," Khelil, who is also Algeria's energy minister, told delegates at the World Petroleum Congress in the Spanish capital.
He said there were "big uncertainties" about making huge investments in energy infrastructure to increase output from the 13 OPEC member countries, which currently pump about 40 percent of world oil.
"I don't think anyone questions that we have enough resources; the issue is if we are able to supply it to the market," he said.
The market was energised Monday by tensions over oil producers Iran and Nigeria, and as the dollar remained weakened against other major currencies. International oil contracts are priced in dollars.
Analysts warned that such factors could drive prices to fresh heights in coming days.
"Tensions with Iran seem to be worsening and intensifying, Nigeria seems on the brink of complete chaos or even civil war, and the ECB (European Central Bank) seems determined to march the US dollar right off a cliff" with predicted interest rate hikes, said analysts at energy risk management firm Cameron Hanover.
The United States has expressed concern about Iran's nuclear program, but Tehran says the program is for peaceful purposes.
"Any one of these three flash points could ignite a new round of buying in the oil markets," they said.
Global oil prices have doubled in the past year and have risen by almost 50 percent since the start of 2008 when they breached 100 dollars for the first time, triggering fears over inflation and slower economic growth.
Consumer countries blame record prices on tight supplies amid strong demand and unrest in producer countries such as Iran, Iraq and Nigeria. In particular, they accuse OPEC of not producing enough crude.
The cartel, however, insists that the weak US currency is at fault, as it drives up demand for dollar-denominated oil from foreign buyers armed with stronger currencies.
"Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions," the IEA, the world's energy watchdog, said in a report published Tuesday.
"Blaming speculation is an easy solution which avoids taking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency."
King Abdullah of OPEC kingpin Saudi Arabia -- the world's number one oil exporter -- meanwhile called on consumer countries to get used to high prices.
"Consumer countries have to adapt to the prices and the mechanisms of the market," the king said in an interview published Tuesday by the Kuwaiti daily Al-Siyassah.
