MercoPress. South Atlantic News Agency

OPEC: oil barrel price should be US$ 70; blames speculation

A weak dollar and geopolitical problems are fueling the speculative bubble in oil markets which should be trading at around half the current price of a barrel said on Monday, OPEC President Chakib Khelil.

"In terms of fundamentals, there is no problem of supply and demand. There is much more a bubble due to speculation, which is based on a depreciating dollar and geopolitical tensions" said Chakib Khelil, who is also Algerian Energy and Mines Minister, quoted by the Algerian official news agency APS. "The problem is the economic crisis in the United States, which led the dollar to fall sharply, and threats against Iran, which have increased geopolitical tensions. If there were not these factors, oil prices would probably be at 70 US dollars", underlined the Organizations of Petroleum Exporting Countries. Khelil said fuel was being sold at higher prices in consumer countries because of taxes imposed by governments. "In Europe, for example, the price at the pump contains more than 75% of tax" he said. Consumer countries "could lower taxes, but they would then be faced with an increase in consumption. It is a dilemma but it is the only way until oil prices goes down". Meantime Saudi Arabia announced plans to call a meeting of oil producing countries and consumers to discuss ways of dealing with soaring energy prices and work to prevent further unwarranted increases. The kingdom will also work with OPEC to "guarantee the availability of oil supplies now and in the future" Saudi Information and Culture Minister Iyad Madani said. He said that the kingdom has increased its output this month and has informed "all oil companies it deals with as well as countries that consume oil that (the kingdom) is ready to provide them with any additional oil they need". "The Saudi Cabinet has instructed Oil Minister Ali al-Naimi to call for a meeting in the near future that will include representatives of oil-producing countries, consumers and companies that work in extracting, exporting and selling oil to look into the price hike, its causes and how to deal with it" he added. The Saudis are concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting them in the long run. Energy experts say most producers have little ability to expand output. The exception is Saudi Arabia, which is producing about 9.4 million barrels a day and has the ability to increase that by about 2 million barrels a day, but has not done so. OPEC produces one of three barrels consumed in the world.