Opec concerned about high oil prices, says chief

KUWAIT - Opec oil producers are becoming increasingly worried over stubbornly high oil prices and will be exploring "various options" for the September meeting which will hopefully help ease prices, the cartel chief said.

"We are becoming increasingly concerned at the continuing high level of oil prices, which does not properly reflect the underlying fundamentals of the market," Sheikh Ahmad al-Fahd al-Sabah said in an English language statement in Kuwait City.

"Opec will be exploring various options for the September meeting which will hopefully contribute to moderate prices," added Sheikh Ahmad, who is also Kuwait's energy minister.

He did not elaborate on the nature of these options.

The Organisation of Petroleum Exporting Countries plans to meet in Vienna September 19 to chart output policy as prices have surged to record highs even though the cartel is pumping at 26-year highs to build up world oil inventories ahead of peak winter demand.

On Friday, US crude futures were hovering just below US$68 per barrel as traders worry that Opec is pumping flat out and would strain to make up any unexpected outages.

The Opec president said oil resources and supplies are plentiful and the group has been producing more than the call on Opec crude by 1.5 million barrels per day in the third quarter of the year.

He said existing spare capacity in Opec countries, together with new capacity additions early next year, will be more than adequate to cover demand growth throughout the winter this year and in 2006.

Much of the new capacity to be added from Opec and non-Opec nations is in terms of lighter crudes which is needed by the market, Sheikh Ahmad noted.

"Furthermore, demand is starting to slow down as a result of high prices," he said.

"In view of these fundamentals, one expects to witness some price moderation rather than any further rise," Sheikh Ahmad added.

- REUTERS