MercoPress. South Atlantic News Agency

OPEC: no oil shortage; investors abandoning US dollar

OPEC is ready to increase its output if the fundamentals of supply and demand justify such a move, but does not believe there is a current shortage of oil in the market, the cartel's secretary-general Abdallah el-Badri said on Wednesday.

"Let me be clear, the high prices which we are witnessing are not because of any shortage of crude oil in the market" he said in a statement emailed to Agence France-Presse. El Badri said the cartel was ready to pump more oil at any time if it was justified by fundamentals but he insisted there is no shortage of oil in the market, and that OECD oil stockpiles remain within their average range for the last five years. El Badri statement comes as a response to US president George W Bush currently visiting Middle East, call for OPEC to increase crude output to help cut the cost of energy. "The president said there's a hope that as a result of these conversations that OPEC would be encouraged to authorize an increase in production" White House spokeswoman Dana Perino said on Wednesday after Bush arrived in Egypt from Riyadh on the latest leg of his Middle East tour. "He's worried about high oil prices and how they can negatively affect economies around the world," Perino added. OPEC Secretary General said that current oil prices do not reflect the market fundamentals of supply and demand, blaming instead persistent geopolitical unrest, the weakness of the dollar, outages in the US refining system and the growing role of speculators. These investors, he said, having turned away from the depressed US real estate and financial markets, have increased volatility in the oil market and pushed prices to an artificially high level, which is not justified by the underlying fundamentals of the market. El Badri argued that it is not "not certain" that prices will continue to rise, he does not see the recent weakening of the world economy leading to a collapse in growth and does not believe it will have a significant effect on oil demand growth in the coming months. Furthermore the current downturn in the US economy "is not the result of the high oil prices". Meanwhile Wednesday, the International Energy Agency kept its 2008 forecast for oil demand unchanged despite growing expectations of a recession in the United States which would be expected to curb demand. OPEC is due to meet to discuss production on February first in Vienna. The cartel, which is responsible for around 40% of the world's oil output, has come under increasing pressure to increase production to curb soaring oil prices.