Oil price falls as Opec hints it may move to raise output

“If the oil market needs it, Opec will inject more oil into it,” Javad Yarjani, the head of Opec affairs at Iran’s oil ministry, said. (Iran is the second-biggest producer in Opec.) Qatari Oil Minister Abdullah bin Hamad Al-Attiyah added: “I have received no complaints from any customers about a shortage of crude supplies. Opec should move when there is strong evidence that there is a shortage in crude supplies” – which signal there now is as inventories are running lower. Recently the president of Opec, Mohamed al-Hamli, admitted that: “We are concerned about the higher price, because we don’t want to go through a recession”.
Opec’s tentative moves come as a reply to calls from Washington and the Inter-national Energy Agency. Guy Caruso, the head of the analytical arm of the US Department of Energy, said recently: “We need more production in the second half of the year, or we would have very low inventory.”

With the world economy growing at 5 per cent or so and no sign of China’s near insatiable demand for natural resources subsiding, it may even be beyond Opec’s resources to stabilise matters. Even now the oil price is within 10 per cent, in real terms, of its all-time high reached in the “spike” after the Iranian revolution in 1979-80.

Independent