Opec is not to blame for soaring oil prices which have hit 13-year highs as members pump up to maximum capacity, but the producers' cartel must do more to calm a nervous market, Gulf analysts say.
Unexpectedly strong economic growth in some industrialised nations as well as China and India, has driven demand for the crude to higher levels, pushing prices to around 40 dollars a barrel in New York on Wednesday, the highest since 1990.
Fear of terrorist attacks on oil installations in the Middle East, especially in Saudi Arabia, prospects of shortages in gasoline in the United States and a drop in world inventories have all contributed to the hike.
"The situation is highly explosive world-wide now, because of lingering fear that oil installations could be targeted by fresh attacks, endangering production," said Kamel al-Harami, a former Kuwaiti oil official.
"Normally, at this time of year, demand drops by at least two million barrels per day (bpd) for seasonal reasons, but the actual demand has in fact increased because of strong world economic growth," Harami told AFP.
Gunmen attacked a Saudi oil facility at the industrial port of Yanbu on the Red Sea on Saturday, killing five staff at European engineering group ABB and a member of the Saudi National Guard. The four attackers also died.
In London, benchmark Brent North Sea crude oil for June delivery rose 26 cents to 36.98 dollars a barrel Thursday in early trading, levels last seen in October 1990 in the wake of Iraq's invasion of Kuwait.
New York's reference light sweet crude June contract gained 33 cents to 39.90 dollars in pre-opening electronic deals, having also closed at the highest level for more than 13 years a day earlier.
The New York contract was seen likely to top 40 dollars a barrel within days.
"It is clear that the market is reacting to a demand-driven problem. Opec is currently far exceeding production ceilings and most members are producing to almost maximum capacity," Abdulwahab Abu-Dahesh, senior economist at Riyad Bank, said.
"The problem is not caused by Opec. They are producing 2.5 million bpd above their output quota of 23.5 million bpd. The problem is that demand for oil spiked at a time when stocks were lower than average," he told AFP.
The Organisation of Petroleum Exporting Countries agreed in March to cut output by one million barrels per day to reduce total production to 23.5 million from April 1.
But Opec president, Indonesian Oil Minister Purnomo Yusgiantoro, insisted the cartel was fighting high prices by exceeding its agreed production ceiling by 1.5 million barrels per day.
Saudi economist Bishr Bakheet, head of Bakheet Financial Advisors, believes that "real" oil prices are not high if inflation rates and the price index of other commodities were taken into account.
"Consumers cry about high prices appears to be totally political. Real oil prices are not high if factors of inflation and high increases of prices of internationally-traded commodities were considered," Bakheet said.
Opec kingpin Saudi Arabia is perhaps the only country that has spare capacity and is currently producing some 8.6 million bpd, about one million barrels above its quota.
Kuwait, with an Opec quota of 1.886 million bpd, is reported to be producing at 2.35 million bpd, believed to be its current maximum output capacity.
Gulf Arab states, which include Opec members Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, in addition to non-Opec Oman are estimated to be producing 15 million bpd.
Global demand for oil is estimated at 80-81 million bpd compared to forecasts at around 79 million barrels, Abu-Dahesh said.
The Center for Global Energy Studies (CGES) has raised its forecast for demand growth this year from 0.9 percent to 2.3 percent, and International Energy Agency (IEA) upgraded to 2.2 percent from 1.4 percent.
But Opec can certainly play a psychological role to ease market pressures, Harami said.
"They need to assure the world that they are maximising output until markets stabilise. This will calm the market down," Harami said.
Opec oil ministers are due to hold an informal meeting at an international oil summit in Amsterdam May 21 to study the market.
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