LONDON, Dec. 21 (UPI) -- The Organization of Petroleum Exporting Countries is courting risks for world economic recovery by not doing enough to maintain a better balance between oil price and production, London's Center for Global Energy Studies warned in its Monthly Oil Report.
CGES published its analysis of OPEC officials' conduct at the recently ended ministerial conference of the producer group in Ecuador.
It said oil prices would rise in 2011 unless OPEC changes its outlook.
The talks gave a "clear indication" that OPEC members are quite happy to see oil prices at $90 a barrel and even higher, CGES said. "Suggestions that rising oil prices might derail economic recovery and that the world needs more oil from OPEC were dismissed with assertions that the market remained 'well supplied' and that prices were rising because the value of the U.S. dollar was falling against other major currencies."
In fact, the think tank said, the recent oil price hike had little to do with the dollar and more to do with oil supplies being tight.
OPEC met in Ecuador as crude oil prices touched $90 a barrel.
Instead of taking measures to bring prices down to the $70-$80 range, OPEC leaders claimed even $90 a barrel wasn't good enough, as it hurt producers.
CGES criticized OPEC's approach to market strategies. "While OPEC looks to developing economies in the East for future demand growth, it bases its assessment of whether or not the market is in balance on historical inventory levels for the developed economies of the OECD. This gives a false picture of the state of the global oil market," it said.
It said OPEC needs to bring more oil into the market to stabilize prices.
"OPEC is no longer producing enough oil to meet demand and oil prices are rising as a result, just as they were in 2007 and the first half of 2008," CGES said.
"It is one thing for OPEC to have pursued ever higher oil prices when the global economy was growing at a rate of 5 percent per annum, it is quite another when the world is struggling to emerge from recession." Oil producers at large, CGES said, "ought to be worried about undermining oil demand growth."
The center, which backs up its conclusions with researched data, warned that "higher oil prices risk jeopardizing the economic recovery and are already contributing to rising inflation."
It said, "The governments of oil consuming countries have yet to raise any protest, though, because high oil prices are also helping their own renewable energy and conservation policies, while the oil industry is as happy as OPEC with high prices."
The center pointed to inconsistency in the producer group's stance on oil prices.
"OPEC's view of a 'fair' price for oil seems, once again, to be rising as actual prices
rise," CGES said. "Unless OPEC's sentiment changes, or the global economy slows dramatically once again, the world is set for higher oil prices next year."
