Opec condemns oil price 'hijack'

16 July 2008
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17 July 2008

Speculators have "hijacked" the oil market and played a major role in this year's run of record prices, according to the Organisation of the Petroleum Exporting Countries (Opec).

Speaking at the launch of Opec's World Oil Outlook review, secretary general Abdalla Salem El-Badri said there is no issue with supply and demand. But factors such as market speculators, the weak US dollar and Middle East conflict are "damaging" oil prices. This contrasted with the view of the International Energy Agency, which said supply constraints and continued demand in emerging markets were the dominant pressures (Web news, 2 July).

Opec predicted the average price per barrel up to 2030 would be between $70 and $90 (£35-£45). El-Badri said if the industry can "get rid" of speculation, prices should stabilise. As SM went to press, the Opec crude oil basket price was $133 (£67).

It added supply is "more than" adequate and demand for the commodity would be lower over the next 22 years.

Damien Cox, of energy procurement consultancy John Hall Associates, agreed investors are playing a part in inflated prices. But John Westwood, chairman of analysts Douglas-Westwood, said it was difficult to see demand falling.


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