MercoPress. South Atlantic News Agency

“Oil prices too steep and not justified”, says Opec

The Organization of Petroleum Exporting Countries, Opec believes oil prices are too steep, after setting a fresh record high above 70 US dollars a barrel and the rise is not justified by market fundamentals, a senior Opec delegate said on Tuesday.

The delegate said there was no shortage of crude oil supply and that Opec giant Saudi Arabia and other producers had pledged in the past to keep markets well supplied.

"Opec believes strongly that prices are too high and nobody wants to see these prices," the delegate said. "(But) it has nothing to do with fundamentals."

US crude set a fresh record high on Tuesday on concern that Iran's nuclear row with the West could affect oil exports from the world's fourth-largest producer and as a major Nigerian supply outage dragged into a third month.

May crude was up 46 cents at 70.86 a barrel at 0805 GMT, 1 cent higher than the previous record for a nearby contract, reached in August 2005 as Hurricane Katrina battered the US Gulf Coast. IPE Brent hit a record high above 72 a barrel.

"Geopolitics is riding the price," the Opec delegate said, stressing that there was no shortage of crude in the market.

Ministers from Opec are expected to gather informally this weekend during an International Energy Forum meeting in Doha.

Qatari Oil Minister Abdullah al-Attiyah said on Monday the cartel was already producing at maximum levels and was expected to maintain its current output for the rest of the year if demand levels hold and with the current level of prices.

Attiyah said he was confident there would not be any supply disruptions from Iran, which pumps around 5% of the world's oil.

A senior Opec delegate said on Monday crude oil markets were expected to remain well balanced for the rest of the year and that there were enough crude stocks and spare capacity to meet any unexpected supply shortage or increase in demand in 2006.

The delegate also said the prolonged shut-in of more than 500,000 barrels per day in Opec-producer Nigeria had resulted in "some distortion" in some refineries but was not a global issue.

Saudi Arabia has the lion's share of Opec's spare capacity. Riyadh has repeatedly said there is not enough demand from refiners for the medium and heavy crudes that constitute the bulk of its unused output capacity