Along with other members of the global community OPEC has been closely observing oil price movements recently, seeing that the OPEC Reference Basket has risen by more than $8.50/b since 8 February, reaching a $48.36/b on Friday March 4th. OPEC is concerned about this price development despite the fact that the market is well-supplied and global crude oil stocks have continued to build, now standing above their five-year average.

This recent price rise is due to a number of factors, such as the late cold snap in the Northern Hemisphere and unexpected outages in the downstream sector, in addition to expectations of continued strong demand and ongoing concerns about the slowdown in the pace of growth in non-OPEC supply, as well as downstream bottlenecks. Increased investment in commodities by speculators has caused further sizeable upward pressure on prices.

OPEC is committed to maintaining stability and ensuring that global markets remain well supplied at all times. Towards this end, OPEC had increased production levels three times during 2004. Currently, the Organization is producing around 29.5 mb/d, which has ensured that demand is fully met, and global crude oil stocks continue to build. Moreover, some of our Member Countries sped up the implementation of their capacity expansion plans, so as to enhance the Organization’s ability to cope with possible future supply disruptions. OPEC’s spare capacity now stands at more than 2 mb/d, and should exceed 3 mb/d by year-end with further capacity expansions expected in the coming years.

Currently, we are monitoring closely the market and on March 16th, when our Ministerial Conference next meets in Isfahan, the Islamic Republic of Iran, we shall review the prevailing market outlook to ensure market stability at reasonable price.