Oil prices have climbed to a two-month high, sparking fresh warnings from Washington as US grades traded close to $30 a barrel. Prices for the European benchmark Brent were just below $29 a barrel in mid-May as the June contract expired. The latest spurt was underpinned by remarks from OPEC ministers, confirming their view that no action was yet required to raise output, and neutral data on the level of US crude stocks.
On 17 May US Energy Secretary Bill Richardson said that he was concerned about current price levels: ‘We are nervous about the spikes, about oil at $30 a barrel, after some initial price stability.’ While he welcomed the relative price stability since the spring, Richardson said that OPEC should not make up its mind about production rates until a week before its 21 June meeting.
For the time being, OPEC ministers continue to hold firm. On 16 May Saudi Arabia’s Petroleum & Mineral Resources Minister Ali Naimi said there was no need for additional OPEC oil. ‘But one always looks at the issue seriously and objectively. However, at the present time we do not see any justification to think about raising production at the next June meeting,’ he told reporters in Riyadh. His remarks were echoed by Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah who said any judgement was premature and current prices were fair.
Despite the latest upward surge, oil prices averaged $24.69 a barrel in the 20 days to 15 May, which is in the middle of the $22-28 price band agreed as a target range. OPEC is pledged to act only if prices breach this range for more than 20 days.