MercoPress. South Atlantic News Agency

OPEC committed to order and stability in oil market

The Organization of Petroleum Exporting Countries, OPEC, called on Friday for full support from major players in the oil market that has seen prices rocket (to over 78 US dollars a barrel), forced by “geopolitical developments over which OPEC has no influence”.

The escalating war between Israel and Hezbollah which could extend to other Middle East countries, plus the Iran/West dispute over nuclear energy and recurrent attacks in Nigeria have impregnated extreme volatility to the market with future December deals reaching the 80 US dollars benchmark.

In its release from headquarters in Vienna OPEC states that it has noted "with concern the strong upward pressure on oil prices of the past few days and wishes to reassure the market of its continuing commitment to order and stability, to the benefit of producers and consumers alike.

"Geopolitical developments, over which OPEC has no influence, have been behind this sudden rise in volatility, and these have come at a time when the market was already out of line with today's supply and demand fundamentals, with speculation playing a significant role in driving up prices.

"It has also occurred in spite of the fact that the market remains well-supplied with crude, and, with crude volumes continuing to enter the market well in excess of demand, OECD stocks are above their five-year average levels.

"This healthy state of the upstream sector has been very much due to OPEC's abiding commitment to market stability, with prices at fair and equitable levels, in support of sound world economic growth, in particular with regard to the needs of developing countries.

"OPEC's Member Countries have increased crude oil production substantially since the recent heightened state of volatility first manifest itself in spring 2004, as well as accelerating their plans to bring on-stream new production capacity to meet continued demand growth and re-establish a comfortable cushion of spare capacity.

"However, to be truly effective in increasing stability and moderating prices, OPEC requires the full support of the other major players in the market, on both the producer and consumer sides. All parties gain from market stability and so all parties must contribute to it. In welcoming the major advances that have been made in dialogue and cooperation within the industry in recent years, OPEC recognises the potential for this to provide tangible benefits in the present volatile market conditions".