The Organization of the Petroleum Exporting Countries stands ready to pump more oil if needed, but it is not clear whether the group will need to boost output before the end of the year, said OPEC President and United Arab Emirates Energy Minister Mohammed al-Hamli.
We are concerned about the higher price, because we don't want to go through a recession, Hamli told Reuters in his first formal interview since taking the presidency at the beginning of this year.
There is so far little sign of any impact on expansion, he said. The global economy looks likely to register strong growth again this year, as it did in 2006, despite high oil prices, he said.
In real terms, adjusted for inflation and the weak dollar, the cost of a barrel is no higher than it was three decades ago, he said.
Hamli said he had no magic number for where he thought the price of oil should be.
London Brent crude hit an 11-month high at $78.40 a barrel last week, within sight of the record $78.65 touched in August last year.
Oil demand growth from emerging markets such as China and India is strong, but Hamli said he did not know if that meant OPEC would need to open the taps this year.
Whether we are going to have to change by the end of the year, I don't know, he said.
CHINA DEMAND, NON-OPEC SUPPLY
Some OPEC officials have said the group will have no need to alter output policy in 2007.
China, the world's second-largest energy consumer, reported its fastest annual rate of economic growth for over 11 years last week. Booming demand from China took energy markets by surprise in 2004 and has contributed to a long-term bull rally in which prices have more than tripled since 2002.
Hamli pointed to forecasts for a large increase in supply from producers outside of OPEC due onstream later this year, which should help meet rising demand.
OPEC, source of more than a third of the world's oil, has faced constant pressure this year from consuming countries represented by the Paris-based International Energy Agency to increase crude output to dampen high prices.
But Hamli said boosting output would do little to ease the price as crude supplies were already sufficient. Global crude stocks are well above the five-year average, and pumping more would just add to the stockpiles, he said.
If we see there is a need for more oil, we will supply more, he said. But if we supply more now, it will go straight to stocks.
Crude stocks in the world's largest consumer, the United States, recently hit a nine-year high.
Tight supplies of refined products in the United States, investment fund buying of oil futures and international political tension have pushed the price higher, Hamli said. His comments echoed those of fellow OPEC ministers who have said crude supplies are adequate.
The Atlantic hurricane season, which caused havoc in the U.S. oil industry two years ago, could add to the rally, he said.
I don't think people understand how strong these factors are. The hurricane season will put more pressure on the price in the biggest consumer market in the world.
OPEC agreed to cut output by 1.7 million barrels per day, or about 6 percent, last year to bolster falling prices. The price sank to around $50 in January.
There are no plans for OPEC to meet before its next scheduled gathering to discuss output policy in September, Hamli said.
The UAE is moving ahead with plans to boost output capacity to 3.5 million barrels per day by 2011 to 2012, Hamli said. Current capacity is around 2.8 million to 2.9 million bpd.
The Gulf Arab state has felt the effects of the cost inflation and a shortage of skilled labor and contractors, which has hit the industry worldwide, he said.