LAGOS (Reuters) - The recent hike in oil prices is driven by speculation and a weak dollar rather than any new demand, but more intervention by OPEC exporters is not ruled out, Nigeria said on Wednesday.
The 12-member exporters’ group agreed a small increase in output last month, which is due to take effect from November 1, but U.S. futures hit a new record high of $89 per barrel on Wednesday.
“I think the current hike in prices is as a result of speculation rather than demand and supply and therefore, I am not sure more oil on the market will directly impact the price in the short term,” Nigerian Minister of State for Petroleum Odein Ajumogobia told Reuters in an interview.
Washington said it was concerned about the “very high” price and said there were issues over oil supply.
At OPEC’s headquarters in Vienna last month, the group agreed to lift supply from next month by 500,000 barrels per day (bpd) to 27.25 million bpd for 10 members. Iraq and Angola do not have a quota.
The ministers also agreed to meet informally during an OPEC heads of state summit in Saudi Arabia on November 17, and they could convert that consultation into a formal conference if more action on output is required, Ajumogobia said.
“There will be a meeting of ministers, initially informally, but there may be a formal meeting. We are still a month away and it depends what transpires before then,” he said.
“We did anticipate that we would review (in Riyadh) our decision in Vienna, we would look at the situation and see how it develops and see if there was a need for further intervention, so it is not ruled out.”
Hedge funds are seeing oil as a store of value like gold because of the weakening dollar, and speculation that oil could hit $100 a barrel is triggering forward buying, he added.
Ajumogobia declined to say what he considered to be the right price for oil, but said fast-growing Chinese and Indian economies were more prepared to bear a higher price than established Western powers.
“For those who need the energy, perhaps $100 oil is not frightening, depending on their capacity to absorb that price. The economies in the West perhaps are slightly different. OPEC sees it as a global market,” he said.
OPEC is wary of creating more volatility in the price, and ministers do not want to take any decisions that would force the price down from $87 to “something significantly lower very suddenly,” he added.
Oil production in Nigeria is rising after two years of decline or stagnation as oil fields in the Niger Delta hit by violence resume pumping.
Industry officials expect output to rise by 500,000 bpd from its current level of 2.16 million bpd by the third quarter next year. Ajumogobia said Nigeria would ask OPEC for a higher quota when it became necessary.
“We need to be able to match production to capacity to some extent, if there is capacity in the market for the additional production... We would be seeking an uplift in whatever allocation is given to us,” he said, declining to be specific about volume or timing.
Nigeria’s limit under OPEC from next month is 2.16 million bpd.
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