OPEC pledges extra oil if Iraq clashes curb supply
OPEC pledged to pump as much oil as the world needs to replace any barrels lost from the escalating violence in Iraq that drove prices to a nine-month high.
Oil prices have climbed because of speculation, not an actual shortage, OPEC Secretary General Abdalla El-Badri said Tuesday after talks with EU Energy Commissioner Guenther Oettinger in Brussels.
Prices rose 4.8 per cent in June, heading for the biggest monthly advance since August, and on June 19 climbed to $115.71 a barrel, the highest since Sept. 9.
Iraq is OPEC’s largest producer after Saudi Arabia.
Production from Iraq’s southern region, which accounts for 95 per cent of its crude output, is “intact,” El-Badri said. The Organization of Petroleum Exporting Countries is sticking to its daily production target of 30 million barrels and has no plans to hold an emergency meeting to reassess the market in view of the fighting, he said.
“If there is a problem in the market, OPEC is ready to solve this problem,” El-Badri told a joint news conference with Oettinger.
“Right now, the market is very well supplied. There is no shortage of oil in the market at any place in the world.”
Saudi Arabia has capacity to raise crude production to at least 12.5 million barrels a day, should there be a shortage, a Saudi official said Tuesday. The kingdom was producing at a daily rate of 9.67 million barrels last month, according to data compiled by Bloomberg.
Saudi Arabia raised production by about 3 million barrels a day, to full capacity of 8.5 million a day, after Iraq invaded Kuwait in 1990, the Saudi official said.
“There’s no reason to look to any worst-case scenario,” Oettinger said. “OPEC is reliable as a team.”