Revolutionising Awareness

http://in.finance.yahoo.com/news/OPEC-worried-high-oil-price-reuters-5695835.html

OPEC building is pictured in the centre Vienna September 14, 2010. REUTERS/Herwig Prammer/Files

By Eman Goma

KUWAIT (Reuters) – High oil prices represent a potentially major burden for importers with global economic recovery still fragile, leading OPEC ministers said on Monday.

Saudi Oil Minister Ali al-Naimi, a day after confirming the kingdom slashed oil production by more than 800,000 barrels per day (bpd) in March due to weak demand, warned of continued weakness in the global economy.

“The recovery remains patchy, in many countries unemployment remains at unacceptable levels,” Naimi told a meeting of Middle Eastern and Asian energy officials, according to the text of his speech obtained by Reuters.

Consuming nations have warned that rising oil prices, which earlier this month touched $127 a barrel, their highest level since July 2008, pose a threat to economic growth.

OPEC ministers for the most part have acknowledged the risk high oil prices pose but say there is little the group can do about it as demand for crude is being met with sufficient supplies.

“At these high price levels, spending on oil imports could represent a significant economic burden for many import dependent countries,” Kuwait ‘s Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said in a speech at the meeting.

OPEC Secretary General Abdullah Al-Badri called on consuming nations to rein in speculators, saying they had added a $15 to $20 risk premium to the price of crude.

SAUDI SPECIAL BLEND REJECTED

Oil has been pushed higher since the start of the year by the wave of discontent that has swept through the Arab world, toppling the leaders of Tunisia and Egypt and touching off a civil war in Libya that has brought oil exports to a halt.

Saudi Arabia , Kuwait and the United Arab Emirates boosted output when Libyan supplies were lost but they have struggled to find buyers for the extra crude they are pumping.

Saudi Arabia tried to replicate Libya’s very low sulphur, high quality sweet oil with a special blend of crude, but refiners have only bought 2 million barrels of the blend.

“The market doesn’t want to change the Libyan crude, they still wait for the Libyan crude … I am surprised that nobody is buying the new ( Saudi ) crude,” Al-Badri, a former head of Libya’s OPEC delegation, told reporters.

The bulk of the crude oil produced by OPEC is sour, or high sulphur, while sweet crudes, like Libyan barrels, are highly prized for making transport fuels that have tight sulphur restrictions.

Iran ‘s OPEC Governor Mohammad Ali Khatibi told Reuters the market was well supplied with sour crude.

“There is a shortage of sweet crude, the Libyan kind, and as we enter the driving season there is higher demand for sweet crude,” he said.

(Additional reporting by Amena Bakr and Reem Shamseddine; writing by Robert Campbell; editing by James Jukwey)

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