3 July 2008

MADRID - Contrary to the claims of a number of oil giants, such as Repsol YPF and BP, who insist lack of supply is behind spiralling global crude prices, OPEC General Secretary Abdalla Salem El-Badri on Tuesday blamed speculators in the industry.

"Let me first make clear that there is no problem with supply," he said. "The rise [in crude prices] is due to the devaluation of the dollar, geopolitical tensions [in the Middle East] and speculation."

The Libyan OPEC chief, who has been attending the World Petroleum Congress in Madrid which ends Thursday, continued: "In reality it is very easy to explain. Last summer's subprime crisis in the United States caused a lot of harm to stock markets, and since then financial investors have been looking for other products and raw materials are now the most attractive commodity for speculation."

The OPEC head disagreed with a statement made on Monday by BP CEO Tony Hayward, who dismissed as "a myth" allegations that speculators were behind steep crude prices.

"I can answer back in the same way," he said. "Lack of supply is a myth."

El-Badri denied that OPEC member countries were placing obstacles in the way of foreign companies to stop them from investing in their countries. "There are many [countries] that maintain their doors open to [outside] investments by private companies," he said.

"And some of the countries of these private companies are keeping their doors shut. Eighty-five percent of offshore areas are off-limits in the United States."

El-Badri said that OPEC, the only Third World organisation that has been able to exert economic pressure on the developed world, produces 40 percent of global crude output and is presently investing USD 160 billion in exploration and production projects.

"For example, BP, could try to invest more in order to extract more oil from the North Sea," he said. "Nobody is waiting in line to purchase oil. We do not think there is a shortage."

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