CARACAS (Reuters) - Rising oil prices do not threaten the global economic recovery and there is no need for an emergency OPEC meeting to consider increasing supply, Venezuela’s Energy Minister Rafael Ramirez said on Saturday.
Brent crude prices rallied this week to around $98 a barrel while U.S. oil futures were at about $91, well above the $70-$80 range that OPEC’s top exporter Saudi Arabia says is comfortable for both producers and consumers.
Venezuela often calls for higher prices to maximize its revenue from a sector that is the linchpin of an economy that has diversified little from reliance on oil in the last century and has been battling recession for the last two years.
“The price is approaching the fair value of $100 per barrel,” Ramirez told Reuters, reiterating the stance of two other OPEC members, Libya and Ecuador, which say prices need to be higher to help producing nations maintain output.
Analysts are divided between those who see fundamental strength as the world economy recovers, driving up fuel consumption, and those who focus on differences between today’s relatively well-supplied market and that of 2008, when oil prices raced to an all-time high of nearly $150 a barrel.
OPEC often says it will act to address any supply shortages, but not to tackle price rises that it says are caused by speculators. The group’s Secretary General Abdullah al-Badri repeated that position on Saturday.
The group has held its supply target steady since a decision in December 2008 to implement a record cut in production levels of 4.2 million barrels per day (bpd) to bolster prices after the global financial crisis.
Ramirez said Venezuela, South America’s biggest crude producer, was not concerned by the current situation.
“We don’t think it (the price rise) impedes the recovery of the global economy,” he said. “Venezuela does not consider that an extraordinary or emergency OPEC meeting is necessary.”
Ramirez also told Reuters that Venezuela’s proven oil reserves had increased to 297 billion barrels by the end of 2010, 41 percent higher than the year before.
Ramirez said the differential between Brent crude prices and U.S. oil futures showed the need for a measurement based on a basket of currencies instead of just the U.S. dollar.
“We have contracts that are linked to the Brent price. A currency basket for oil transactions is necessary for stability,” he said. “The spread shows the weakness of the dollar, which is a structural problem of the U.S. economy.”
The spread between the two grades widened to as much as $7.66 this week, the widest premium the London grade has held to the United States’ WTI prices since February 2009.
Strength in price, trading volumes and the market structure of Brent crude has helped lure some big investment money that typically favored U.S. oil futures — a trend that analysts say is likely to gather momentum.
Asked about U.S. appeals that Venezuela stop doing business with Iran, Ramirez said no action would be taken as a result.
“We are sovereign,” the minister told Reuters. “They cannot dictate to us in this manner.”
President Hugo Chavez’s socialist government has actively sought to promote ties with fellow OPEC member Iran, with which it shares a distaste for U.S. global power.
Venezuela had said it was sending 20,000 bpd of gasoline to Iran — but that it had stopped in recent months because Tehran no longer needed the shipments.
Last month, Venezuelan lawmakers approved the creation of a joint venture between state oil company PDVSA and Iran’s Petropars Oil and Gas Co to develop an oil and gas field in the South American country.
The Venezuelan government also said in October that PDVSA would work with Petropars to help develop the Middle Eastern nation’s giant South Pars natural gas field.
Writing by Daniel Wallis; Editing by Andrew Cawthorne and Paul Simao