1 July 2008

MADRID - The heads of some of the world's major energy companies on Monday countered OPEC claims that speculators were at the heart of spiralling crude prices, instead blaming a lagging supply that cannot keep up with burgeoning demand.

Chief executives of oil majors such as Repsol YPF, Anglo-Dutch Shell and BP, who are gathered in Madrid for the 19th World Petroleum Congress which runs until Thursday, said the biggest cause behind sagging oil demand was investment restrictions and high taxes.

BP's CEO Tony Hayward dismissed as a "myth" allegations that oil futures speculators were behind a rally that had driven crude prices on Monday to new records of above USD 143 per barrel.

Repsol YPF CEO Antonio Brufau agreed. "The fundamentals in the industry are the main reason for these prices," he said.

Shell CEO Jeroen van der Veer admitted that global oil markets were "tight" and that there was increasing concern over supplies not meeting future demand.

"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."

Analysts at Goldman Sachs have dismissed the speculative bubble argument as well. The US brokerage said that such an argument was "unwarranted".

But Spain's Industry Minister Miguel Sebastián did not agree with the arguments put forth by the oil heads. While there is a "clear speculative component" driving up prices, he said, there was "insufficient" supply plugging demand. The minister pointed out that while oil consumption had risen by 15 percent, OPEC had reduced output by 0.3 percent.

[El Pais / Expatica]