Opec’s president warned oil prices could hit $200 a barrel and there would be little the cartel could do to help.
The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices hit a historic peak close to $120 a barrel, putting further pressure on global economies.
His remarks suggest Algeria wants Opec to continue to resist calls by US and European leaders for the cartel to pump more oil to help ease prices. But Mr Khelil blamed record oil prices on the weak dollar and global political insecurity.
He told El Moudjahid, Algeria’s government newspaper: “I don’t think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the United States have recorded a surplus and are at their highest level for five years.”
He added: “The prices are high due to the recession in the United States and the economic crisis, which has touched several countries, a situation that has an effect on the value of the dollar. Each time the dollar falls 1 per cent, the price of the barrel rises by $4 and of course vice versa.”
Some US senators have pinned the blame for high oil prices directly on Opec and Saudi Arabia, its largest and most powerful member. In a letter to President George W. Bush last week, they said Riyadh had cut its oil production by about 2m barrels a day over the past three years even though oil prices had continued to rise.
Ali Naimi, Saudi Arabia’s oil minister, earlier this month said he did not believe the market needed any more oil, adding the kingdom would pump more if needed. Saudi Arabia, the only Opec country with significant spare capacity, has reduced output slightly in recent weeks as it believes demand will fall, especially in the US, because of the economic downturn and the end of winter demand.
The current impasse risks further worsening relations between the US and Saudi Arabia – one of the world’s most reliable suppliers of crude oil for decades. That relationship has been strained by the west’s growing dependence on Riyadh’s oil and the kingdom’s apparent unwillingness to do much to lower prices.
Opec ministers most recently put oil price expectations in the $90-$120 a barrel range.