The heads of some of the world's biggest oil companies countered on Monday OPEC claims that speculators were driving high oil prices, instead blaming a dearth of new supplies.
The chief executives of Royal Dutch Shell, BP and Spain's Repsol told the oil industry's biggest gathering in three years that restrictions on where they can invest and high taxes meant they could not help boost supplies as much as they might.
BP's CEO Tony Hayward said the argument that financial investors buying oil futures were behind a four-year rally that pushed oil prices to new records above $143/barrel on Monday was a "myth."
He said the problem was a failure of supply growth to match demand growth.
"Supply is not responding adequately to rising demand," he told thousands of delegates at the World Petroleum Congress.
Repsol CEO Antonio Brufau agreed.
"The fundamentals in the industry are the significant reasons for having these prices," he said.
Shell Chief Executive Jeroen van der Veer said there was enough supply to meet current demand but that the market was tight and that many users were justifiably worried that future supplies will not meet demand.
Insofar as financial investors were involved in the market, they were only following such supply fears.
"We don't think that the financial markets are leading the speculation, probably they follow what other people fear as long term fundamentals," Van der Veer said.
"I do not think that you can blame speculation for the oil price."
U.S. light crude was up $2.55 at $142.76 a barrel, after a record high of $143.67 a barrel, propelled by heightened market fears of conflict between Israel and Iran over Tehran's nuclear program.
Access to Reserves
Hayward said politics rather than geology was the reason behind anemic supply growth.
"The problems are above ground not below it," he said.
Brufau noted that the vast majority of the world's oil reserves were in countries, such as Saudi Arabia and Kuwait, which restricted investment by international oil companies.
Despite falling spare global oil production capacity, the OPEC oil cartel argues that supplies are ample and that they are investing enough to ensure consumers will have the oil they need in future.
However, analysts say that while the oil majors tend to boost their investments when oil prices rise, in the hope of lifting output and profits, state-run or national oil companies (NOCs) often do not respond to market signals.
NOCs' investments are driven by other priorities such as their government's short-term cash needs, maximizing long term returns and possibly management of the oil price.
High taxes have also limited investment, the executives said.
As oil prices rose in recent years, producing countries from Russia to Venezuela have boosted oil taxes sharply.
Hayward said taxes were now "dangerously high."