Nov 13, 2007, 13:51 GMT
Riyadh/Vienna - Saudi Arabia made clear ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC) this weekend that while OPEC was seeking to restore balance in the oil market, the cartel does not share analysts' views that a significant production increase is needed to curb ever-rising oil prices.
Saudi Oil Minister Ali al-Naimi told a press conference in Riyadh Tuesday that prices were influenced by factors other than market supply.
'There are many factors that influence oil prices, one of which is the dollar. If the dollar is stronger, it will have an impact on oil prices,' al-Naimi said.
Countering pessimistic views that reserves were insufficient he stressed 'reserves are sufficient at this stage,' adding that fears about oil supply played into current market instabilities.
'The kingdom [Saudi Arabia] and OPEC seek to create a stable market. This is what we are doing. The stronger this unfounded pessimism becomes, the more unstable the oil market is,' the minister said.
Al-Naimi rejected views that OPEC's unchanged output in the past was to blame for current alarmingly high oil prices.
He said no decisions on production quotas were to be made at the upcoming two-day summit starting Saturday.
'The Riyadh summit will not deal with output and prices. Prices are discussed in normal OPEC meetings,' al-Naimi said.
The participating oil ministers were expected to hold informal discussions about the market, analysts said.
OPEC, which controls 40 per cent of the world's oil output, blames recent price increases on speculation, mainly in options trading rather than on supply shortages.
Al-Naimi dismissed views that oil demand was higher than current supplies.
OPEC analysts, who share the view that speculation is responsible for part of the price hike, believe that a further output increase of up to 1.5 million barrels per day would be necessary to stop the current oil price rally.
OPEC increased production by 500,000 barrels per day as of November 1.
One barrel of OPEC-produced crude cost 88.80 dollars on Monday, down from a new record high above 90 dollars the previous week.
Prices started to drop slightly as OPEC did not rule out a decision on increasing production for its next policy meeting scheduled for December 5 in Abu Dhabi.
This weekend's Riyadh conference is expected to focus on long-term strategies, long-term maintenance of energy supplies, price stabilization and environmental issues.
Your Talkback on this Story