Page last updated at 19:58 GMT, Tuesday, 24 June 2008 20:58 UK

Opec shuns calls to produce more

Oil worker turns a valve
Oil consuming nations want producers to tap more oil

Opec president Chakib Khelil has said the cartel of oil producing nations is pumping enough output, and that high prices are down to other factors.

He put the current price rises down to other factors outside Opec control, such as US pressure on Iran and the weak US dollar.

Mr Khelil was speaking after talks with European Union nations.

His comments sent oil prices above $138 a barrel during Tuesday trade, before prices dropped back in later trade.

New York's main oil futures contract - light sweet crude for August delivery - rose as high as $138.75 before dropping back to $137 at the end of the normal trading session.

In London, Brent crude was up 55 cents at $136.46 a barrel.

Fuel protests

Mr Khelil said Opec was pumping enough oil to meet current demand and that the organisation had stocks and extra capacity to spare.

"As far as fundamentals are concerned I think we have equilibrium between supply and demand," he added.

"I think the market is probably waiting to see how the dollar is going to evolve in July, how the geopolitical situation is going to evolve with the threats made on Iran," he said.

He also blamed high prices on the US sub-prime crisis "and the ensuing impact of the dollar devaluation", and accused also traders of turning to commodity markets, such as oil, when they could not find good returns in areas such as in currency exchange.

The renewed rises come despite Saudi Arabia's promise to increase daily output by an extra 200,000 barrels a day from July.

However, a meeting in Jeddah at the weekend of the world's top oil powers and leading consuming nations ended with no real major resolution on how to deal with record prices.

Fishermen, truck drivers and consumers across Europe and Asia have been protesting against the increase in petrol and diesel costs as oil prices have jumped by about 40% since the beginning of the year.

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