Speculators, not OPEC, 'causing oil price spike'
Posted Tue Jun 10, 2008 11:23am AEST
Updated Tue Jun 10, 2008 11:28am AEST
Oil drums from British Petrolelum
Speculation-fuelled: Rising oil prices have the world economy in turmoil (AFP: Paul J Richards)
A former Iraqi oil minister says record high oil prices are more to do with speculators, including central banks, than supply and demand.
Prime Minister Kevin Rudd is pressuring G8 leaders to push for OPEC to increase oil supply.
Isam Chalabi was Iraq's oil minister before the first Gulf War and has more than 40 years experience in the industry.
He says Mr Rudd's strategy will not work.
"The question of prices today is not related to supply and demand fundamentals - everybody knows that," he told AM.
"Everybody has said so and hence it is not a matter of increasing supplies because whoever is in need of oil has been able to get it, so there is no need of problem of getting the oil."
Brian Wilson, former British energy minister under Tony Blair, agrees.
"What takes it from $US100 to $US130 is that there is a huge speculative element and the actual connection between the paper trading price of oil and anything that is happening in the physical world is now extremely remote," he told the BBC.
Mr Chalabi says only regulation of oil trading will stop the price spike.
"The world consumes 85 million barrels a day, you have trading going on over a billion - some people estimate up to two billion - barrels a day, so if something really happens to put a hold on that, I believe that the price spike will not continue and maybe it will start to decrease," he said.
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