The oil market is well balanced and there is no shortage of crude, OPEC's president said on Thursday, ahead of a meeting of the producer group next week that is expected to maintain supply curbs.
I think the market is very well balanced... There is no shortage whatsoever of oil supplies, Mohammed bin Dhaen al-Hamli, who is also oil minister of the United Arab Emirates, told Reuters.
In the run up to the September 11 gathering, several members of the Organization of the Petroleum Exporting Countries (OPEC) have said they see no need to boost supply, despite calls by consumer nations for an increase that could help bring down high prices.
Hamli, in the northeastern Chinese city of Dalian for the World Economic Forum, declined to comment on what OPEC would decide at next week's meeting. OPEC has spare capacity ready to meet extra demand if necessary, but any additional crude it produced now would go into already high stockpiles, he said.
Although U.S. crude traded above $76 on Thursday, near the record-high hit in August, Hamli said that adjusted for a weak dollar and inflation, prices were around 1970s levels.
Strong economic growth, despite recent concerns about the health of the U.S. economy after a credit crunch, was also supporting oil demand, he said.
We think the world economy is growing and that means that there is quite strong demand on the oil, he said.
Asked if an extra harsh start to the peak winter season or other unexpected factors could cause them to call a meeting between September and the next gathering in December, to reconsider output levels, he said it was always an option.
If there is a need to meet before the next scheduled meeting we certainly would, he said.
An OPEC source said on Tuesday the group may need to boost crude oil output by up to 1 million barrels per day (bpd) later in 2007, perhaps in December, should demand prove robust and inventories fall.
Hamli also urged countries pushing to boost renewable energy capacity to keep OPEC updated about their plans. China aims to get 15 percent of its energy from non-fossil fuels by 2020, while the European Union is targeting 20 percent.
The producers group, which pumps around one-third of the world's oil, is not worried appetite for crude will tail off, but needs the information to ensure they have enough spare capacity to protect consumer nations without wasting their cash on developing fields that will sit idle.
In OPEC we encourage efficient utilization of resources, he said. There will always be demand for oil, but we want to know.
Hamli emphasized a shortage of skilled labor and bottlenecks in the refinery sector as key factors in high oil prices that were beyond producer nations' control.
The skills shortfall is pushing up costs and causing delays, but he said the UAE is still moving ahead to boost refining capacity.
A refinery to be built in the UAE's Fujairah would possibly have capacity of around 300,000 bpd, Hamli said.
That was down on the 500,000 bpd initially mooted by the Abu Dhabi-owned International Petroleum Investment Company (IPIC), working on a feasibility study with ConocoPhillips for the project, expected to cost between $8 billion and $10 billion.