Saudi oil minister says speculation driving prices

DUBAI Fri Mar 7, 2008 1:53am EST

Saudi Arabia's Oil Minister Ali al-Naimi arrives in the OPEC headquarters for a meeting of OPEC oil ministers in Vienna February 1, 2008. Speculation was driving triple-digit oil making it impossible for any organization to control its movement, Naimi said in remarks published on Friday. REUTERS/Heinz-Peter Bader

Saudi Arabia's Oil Minister Ali al-Naimi arrives in the OPEC headquarters for a meeting of OPEC oil ministers in Vienna February 1, 2008. Speculation was driving triple-digit oil making it impossible for any organization to control its movement, Naimi said in remarks published on Friday.

Credit: Reuters/Heinz-Peter Bader

DUBAI (Reuters) - Speculation is driving triple-digit oil making it impossible for any organization to control price movement, Saudi Arabia's oil minister said in remarks published on Friday.

"Speculation in futures market is determining prices," Ali al-Naimi told Asharq al-Awast newspaper in Morocco. "Today there is no link between oil (market) fundamentals and prices."

"The duty of oil exporters is to make sure that fundamentals are healthy," said Naimi. "If these fundamentals were stable and fulfill market needs, then there is no need to raise or decrease production," he added.

Naimi was speaking on the sidelines of a mining conference a day after OPEC decided to leave its output unchanged, dismissing a call from the United States, the world's top energy consumer, to act to tame prices.

OPEC ministers said recent record high prices had been driven by factors beyond their control, such as a weak dollar, speculation and political strife, not by a lack of oil.

Oil held near $106 a barrel on Friday, within sight of a record high, helped by a drop in U.S. oil inventories, a tumbling U.S. dollar that bolstered fund buying, and OPEC's reluctance to pump extra crude.

Naimi, who also oversees the kingdom's minerals industry, called on foreign and local firms to boost their investments in the Arab mining sector as the prices of metals also surge.

(Reporting by Inal Ersan; Editing by Ben Tan)