March 17, 2008 / 2:33 PM / 11 years ago

Cheney says high oil price reflects market reality

U.S. Vice President Dick Cheney attends a meeting with Iraq's President Jalal Talabani in Baghdad March 17, 2008. REUTERS/Mohammed Jalil/Pool

BAGHDAD (Reuters) - Crude oil prices in excess of $100 a barrel reflect the reality in the market place, U.S. Vice President Dick Cheney said on Monday.

Cheney, on a trip to the Middle East that started in Iraq, said he did not see a lot of excess production capacity worldwide.

Cheney this week will visit Saudi Arabia, where President George W. Bush in January called on OPEC to increase production.

Asked about the prospects for increased oil production in the region, Cheney told reporters in Baghdad traveling with him: “One of the problems we’ve got now obviously is that there is not a lot of excess capacity worldwide.”

He said statistics from a Washington energy consulting group had shown that “there’s just not a lot out there, and some of that excess capacity represents high sulfur crude for example, it’s not very attractive and not easily marketed.”

Cheney said there had also been a “dramatic increase” in demand from countries like China and India, and also a lot of countries that used to produce oil primarily for export were now consuming a larger part of what they produce as their economies develop like some of the Gulf states.

“You look at all of that and you look at the much closer balance if you will between supply and demand, as well as the declining value of the dollar, you’ve got a situation in which we’ve seen the price of oil rise fairly dramatically in recent months,” Cheney said.

“But it reflects primarily the realities in the marketplace,” Cheney said. (Reporting by Tabassum Zakaria; Editing by Ibon Villelabeitia)

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