As oil prices climbed to record levels -- hitting $126 a barrel Monday before dropping Tuesday -- many Western leaders have urged the Organization of Petroleum Exporting Countries to increase production to ease prices. The group has repeatedly refused.
Qatar's Deputy Premier and Energy Minister Abdullah bin Hamad al-Attiyah said he did not see the need for OPEC to meet before its next scheduled gathering in September in response to record high oil prices, the Gulf Times reported.
"There is no need for an early meeting, and we don't believe there is a need for more oil in the market," he said.
He said geopolitics was the main factor driving the oil market, not supply constraints. He also cautioned that prices at current levels were too high and while OPEC producers had received complaints about high prices, they weren't getting complaints about supply.
United Arab Emirates Oil Minister Mohamed bin Dhaen al-Hamli agreed with al-Attiyah and said there were no signs of OPEC meeting before September, but he did add that the cartel would meet any real demand for its oil.
"We are sure the market is adequately supplied," al-Hamli said. "We are ready to supply more oil when the market needs it."
China quake cuts oil demand temporarily
Monday's earthquake in China cut demand for oil, temporarily cutting prices.
Initial reports from Chinese officials and media said refineries in China largely escaped damage in the earthquake that shook the Sichuan province Monday. The area, however, which has more natural fields than large oil processing plants, was definitely affected.
An official from PetroChina said its 200,000 barrel-per-day Lanzhou refinery, the largest in western China and most likely the closest major plant to the quake's epicenter, was shaken but appeared undamaged, China Daily reported.
Other major plants, including PetroChina's Jinling and Sinopec's Maoming, Zhenhai and Gaoqiao refineries, were also unaffected by the quake, officials said, and ports, including a key crude receiving terminal, were also operating normally, sources said.
The Three Gorges Dam, a key hydropower facility, was not affected by the quake, said Hu Xing'e, an executive with the China Three Gorges Project Corp.
Reports from other sources, however, said China's government ordered coal mines, chemical plants and oil and gas wells to halt production to avoid further casualties after the earthquake killed nearly 10,000 people.
The earthquake damaged power plants and transmission lines and may cut the nation's energy demand, what some analysts believe is the reason for oil prices shying away from $126 a barrel for June delivery.
Kazakhs threaten to sanction Agip
Kazakhstan has threatened to sanction the Agip KCO consortium that is developing the Kashagan oil field.
Production at the field has been delayed for more than six months, the Calgary Herald reported.
The oil field is estimated to be one of the largest in the world; recoverable reserves are estimated at 7 billion to 9 billion barrels, but a standoff between the Kazakh government and the consortium has continued to delay drilling.
Kazakh Energy Minister Sauat Mynbayev said the consortium, comprising ExxonMobil and other major oil companies, again has mentioned the possibility of further delaying the schedule.
"Even if there is a small delay … then very concrete sanctions must be drawn up at this stage," Mynbayev said.
The disputes around repostponing the dates of oil production on Kashagan already have led to changes to the government's oil legislation, the Trend Capital News Agency reported.
Closing oil prices, May 13, 3 p.m. London
Brent crude oil: $122.25
West Texas Intermediate crude oil: $124.56
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