Near record oil price ’sign of very tight market’

PARIS (Reuters) — Near record crude oil prices are sending a message to Opec that the world market is very tight, the new head of the International Energy Agency said, five days before Opec’s next meeting.

In his first interview as head of the IEA, Nobuo Tanaka also said he would like the world’s second biggest oil consumer China and India to join the Paris-based agency that acts as energy adviser to 26 industrialised countries.
‘The price level is a signal. The market is still very tight but our concern is what will happen in the future,’ Tanaka said as US oil neared its record high of $78.77 a barrel.

‘Our role for energy security is to keep working with Opec to avoid disruption. We have a dialogue. We can do more. The elements of concern are quite similar. We can work much closer.’

He said it was too early to judge the impact of a global credit squeeze on economic growth and oil demand.

‘We will have some kind of assessment by the end of the year,’ he said.

‘We are more cautious than before as the current subprime financial market turmoil is creating uncertainty in the future.’

The main question, he added, was whether consumers would change their habits. ‘It’s difficult to know how it will impact on the real economy.’

Banks have shied away from lending over the past month as they scrambled to calculate exposure to mass defaults on the US subprime mortgages, lent mainly to poorer people.

TradeArabia