Opening address to the 161st Meeting of the OPEC Conference

No 1/2012
Vienna, Austria
14 Jun 2012

by HE Abdul-Kareem Luaibi Bahedh, Minister of Oil of Iraq and President of the Conference

Excellencies, ladies and gentlemen,

Welcome to Vienna for the 161st Meeting of the OPEC Conference.

I should like to extend a special welcome to His Excellency Hani Abdulaziz Hussain, the Minister of Oil of Kuwait, who is attending the Conference for the first time as Head of his Country's Delegation. Let me also thank his predecessor, His Excellency Dr Mohammad Al-Busairi, for his contributions to the Conference over the past year.

We begin our meeting at a time of heightened oil price volatility. Earlier this year, prices were pushed higher, driven by speculation. They have since fallen back to the levels we see today, affected by concern about the world economic outlook.

Indeed, the overall economic outlook continues to be fragile - especially when we view developments in the Euro-zone and the potential spill-over effects across the global economy, notably in the emerging markets. The euro has established itself as one of the world's leading currencies over the past decade, and so we hope that there is an early resolution of this crisis. Elsewhere in the world, there have been some weaker economic signals from other key areas, such as China, India and the United States of America, and these are also having an impact on the overall economic outlook.

These developments in the world economy have increased the amount of uncertainty facing oil demand, although some growth can still be seen in the emerging economies. On the supply side, incremental non-OPEC supply and an increase in OPEC natural gas liquids will largely service the expected demand growth. Overall, the market remains well supplied with oil.

However, there is a still a disturbing level of price volatility. When we last met, the average weekly price of OPEC's Reference Basket was around US $109 a barrel. It then rose to almost $124/b half-way through this six-month period, before falling again. Most recently, however, the price has become extremely volatile, with the Basket at one stage losing $9.65/b in just four days. This volatility is a matter of much concern to us. So again we repeat OPEC's calls for better regulation of the international financial sector. Meanwhile, OPEC continues its efforts to stabilise prices.

The agreement we reached last December restored an important degree of certainty to the supply side of the market, at a time of much uncertainty about demand. We made it clear then that the agreement was designed specifically to cover the period up to today's Meeting. In the light of this, we shall look carefully at the present conditions in the market. Clearly, there are pressing areas of concern that need to be addressed.

Finally, Excellencies, ladies and gentlemen, let me remind you of something OPEC has been saying for many years. The achievement of order and stability in the international oil market is the collective responsibility of all the parties in the industry and associated areas, including the financial institutions. We all stand to benefit from price stability, and so we must all be prepared to contribute to it in a meaningful, solid and sustainable manner. The big advances in dialogue and cooperation in recent years have provided useful support in this respect. And we should never lose sight of the central role oil plays in fuelling world economic growth and, more generally, in the beneficial evolution of mankind.

Thank you for your attention.