The latest spike in oil prices to near $80 a barrel is “very uncomfortable” and is hurting the world economy, the president of the Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday.
Edmund Daukoru, who is also Nigerian Minister of State for Petroleum, said the conflict between Israel and Hizbollah was responsible for the latest jump, which saw U.S. crude oil futures hit a record $78.40 a barrel last week.
“If it would have stabilized around the mid-60s, I don’t think people would complain too much. We are getting used to that, but the latest shootup to the mid-70s and above is very uncomfortable,” Daukoru told Reuters on the sidelines of a conference in the Nigerian capital.
“Clearly the latest flare-up between Israel and Hizbollah is really the reason for the latest spike,” he said. “It is always unfortunate if we have to address issues outside the power of OPEC.”
High prices bring more revenue to OPEC in the short term, but exporters worry that sustained price increases dent global economic growth and encourage consuming nations to divert investment away from oil to alternative energy.
Asked if current prices were hurting the economy, he said: “At such high prices it must have an impact.”
Oil prices dipped after Daukoru’s comments, with U.S. futures down 64 cents at $72.90 a barrel.
Asked whether OPEC could make up for any possible reduction in oil exports from Iran because of the Israel-Hizbollah conflict, Daukoru said OPEC had plenty of spare production capacity.
“We should have even more than 2 million barrels per day available, so whether the disruption comes as a result of Iran or some other cause, we will be able to put on the extra capacity provided there are refineries to take it,” he said.
Daukoru said he will travel to the Middle East Gulf next week to address some internal OPEC issues such as a forthcoming summit, and would take advantage of the trip to discuss the oil market situation.
“We do our best to moderate the market, but with the current level of volatility one only can take short term decisions. We tend to react at three-monthly intervals,” he said.
Aides said Daukoru wants to resolve a long-standing row between Iran and Kuwait over which country’s candidate should be appointed OPEC secretary-general, the administrative head who represents the cartel and helps coordinate policy talks.
OPEC has been unable to reach agreement on the post since December 2003, and the selection process has exposed political differences between OPEC’s core Gulf members.
The other contentious matter was that both Libya and Saudi Arabia want to host a meeting of OPEC heads of state and government, an aide said.
