US urges oil output boost to ease prices

US Deputy Secretary of Energy Daniel Poneman
attends the International Energy Forum (IEF)
© AFP Fayez Nureldine

RIYADH (AFP) – US Deputy Secretary of Energy Daniel Poneman on Tuesday called on oil producers to boost output in a bid to ease crude prices, which struck $108 over unrest in the Middle East.

“We think that the proper response (to the high prices) is that producers respond to those price signals and see the need for more production and bring that product to the market,” Poneman told reporters in Riyadh.

“When producers bring product to the market, price starts to subside,” the US official said on the sidelines of a producer-consumer conference in the Saudi capital.

“All oil producers need to respond… expect all of them to respond.”

Brent prices broke past $107 in Asian trade Tuesday as violence in Libya and Bahrain threatened to destabilise the key oil-producing Middle East and North African regions.

Brent crude rose over $108 per barrel on Tuesday afternoon, surpassing two-year highs reached on Monday, while the OPEC basket soared to above $100 a barrel.

Poneman said the United States, the world’s largest energy consumer, was watching with concern the unrest sweeping the Middle East and its impact in driving oil prices to high levels.

The US official also said economic recovery could suffer should crude prices keep rising.

Poneman is in the Saudi capital to sign a producer-consumer charter aimed at limiting sharp fluctuations in oil prices and which also covers issues of supply and demand, transparency and regulations.

Two member states of the Organisation of Petroleum Exporting Countries said on Tuesday that the producers cartel will act when necessary if the ongoing violence disrupts supplies.

“We are watching the situation and ready to act when necessary,” said UAE Energy Minister Mohamed al-Hamli, adding OPEC was especially concerned about developments in Libya as the African nation was a member of the organisation.

Kuwait’s Oil Minister Sheikh Ahmad Abdullah al-Sabah also said OPEC would act if prices go too high, but did not provide a specific figure.