His words move markets.
With oil prices hovering close to $100 a barrel, markets and consumer nations alike were looking for Saudi oil minister Ali Al-Naimi to drop some hints about future production policy.
But OPEC’s most influential member has so far remained tight-lipped. What he DID say was that world oil stocks were currently at, what he called … a comfortable level. And possibly offering reassurance for some … Naimi said oil prices nearing $100 were not justified by market fundamentals.
Some are hoping the group will decide to increase production when it meets on December 5th in Abu Dabi.
OPEC is under increasing pressure to contain runaway prices … up almost 70% year to date. The high cost of energy is increasingly being singled out as one of the main threats to the global economy … especially in the U.S.
Fed Chief Ben Bernanke listed high gasoline prices as just one of several headwinds faced by consumers. And the October reading of U.S. consumer confidence … which fell for the fourth month in a row, showed optimism being under-mined by higher fuel costs.
OPEC indeed face a challenging balancing act. The group recognizes it doesn't want to be cast as the bad guy that derails the global economy by failing to boost production. On the other hand, if it does add more oil to the market and the economy sours, it risks creating an oversupply situation.
Even if consumer nations are unhappy about the current level of prices, one thing is for certain. Regardless of the cost, supply lines must remain open. And that was the theme at the two-day energy summit, which took place in Singapore in late November.
Energy hungry economies especially those in Asia are determined to secure future supplies.
And as Abdulaziz Sager chairman of the Gulf Research Centre put it Asia needs security of supply and the Middle East needs security of demand.
And it is that growing demand, say analysts that will likely lead to a steady upward trend in prices in the years to come.
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