High price bothers OPEC
Fitri Wulandari, The Jakarta Post, Jakarta
The Organization of Petroleum Exporting Countries (OPEC) on Friday expressed concern over soaring oil prices, which further increased to set a new record of close to US$50 per barrel mark.
OPEC President Purnomo Yusgiantoro said the cartel would meet in the middle of next month to seek ways to help ease pressure on prices, and may ask non-OPEC oil producers to also play a role.
"I am very concerned with the high oil prices. We will do our best to prevent the (oil) prices from increasing," Purnomo told reporters during a media briefing.
The group, which supplies a third of global oil, will meet in Vienna on Sept. 14 to discuss its quota policy. The meeting may involve major non-OPEC oil producers such as Russia.
"Commitment (to lower oil prices) can come from OPEC and non- OPEC countries. But it also needs help from big oil companies," Purnomo said.
Reuters reported that U.S. light crude for September rose to a new record of $49.27 a barrel late on Friday Jakarta time. London Brent hit a new record $45.15 a barrel.
The news agency said that oil prices were advancing on concerns over escalating violence in Iraq and strong demand from the fast growing economies of China and India.
Clashes between U.S. troops and supporters of Shi'ite Muslim cleric Moqtada al-Sadr in Najas raised fears of sabotage on Iraqi oil facilities.
Iraq's main southern pipeline from the Basra oil fields has been shut down since the last sabotage raid on Aug. 9, curbing exports to about a million barrels per day, half the normal capacity.
Iraq is a member of OPEC but its production was not accounted in the group's output quota.
OPEC is pumping at the highest level since 1979. A report from OPEC headquarters estimated it could raise production to 30.5 million barrels per day (bpd) next month from 29.57 million in July.
Undeterred demand for oil from energy-hungry China and India continues to push crude oil prices higher.
China's oil demand shows no evidence of easing despite government efforts to slow an economic boom. Chinese crude imports for July jumped 41 percent with imports for the year to end-July up 40 percent year-on-year, according to customs data.
India's top refiner, state-run Indian Oil Corp. Ltd., said it expected the country's crude oil imports to rise 11 percent in 2004/05 as demand rises nearly four percent. An oil ministry official said India's crude oil import bill was expected to rise 50 percent to $27 billion this fiscal year.
Although oil prices headed near $50, Purnomo said the group has yet to see signs that the oil hike would slow down global economic growth.
"Demand for goods and services remains strong," Purnomo said.
Indeed, International Monetary Fund director Rodrigo Rato was quoted by Reuters on Friday as saying he still expected world economic growth this year of 4.6 percent.
Purnomo also said there was little sign of increasing inflationary pressure in Indonesia's economy despite the oil hike.
"There is no sign of high inflation in Indonesia as interest rates remain unchanged," he said.
But Purnomo said the government was bracing for a higher deficit in the state budget this year as it had to set aside more funds to finance fuel subsidies. The government has kept fuel prices at home unchanged to avoid social unrest during this year elections.
According to the government, fuel subsidy spending may rise to Rp 56.90 trillion this year, triple the Rp 14 trillion estimate given in the state budget.