Kuwait's Oil Minister Sheikh Saud Nasser al-Sabah has said the current oil price is highly inflated because of the turmoil in the Middle East, a newspaper reported on Monday.
"The current price is highly inflated, and reflects a major reaction to tension in the area and the unstable political situation. When this tension disappears, prices will drop back to normal levels," Sheikh Saud told Al-Rai Al-Aam daily.
Oil prices soared to their highest level for 10 years on Thursday, bursting through 35 dollars a barrel to 35.10 dollars amid clear market nervousness about the escalating crisis in the Middle East.
But in London on Monday, the price of oil fell back on the first day of the Middle East peace summit in Sharm el-Sheikh, as concerns eased that oil-producing Gulf Arab states would be drawn into the Israeli-Palestinian conflict.
The benchmark Brent North Sea crude oil briefly dipped below 32 dollars a barrel before recovering somewhat to 32.46 dollars, from 32.52 dollars at the close on Friday. Sheikh Saud said the average oil price was "reasonable".
He reiterated that the market was not in need of additional supplies, insisting "there are huge quantities of crude oil on the international market that would quickly help bring the prices down to normal levels." The Middle East turmoil exacerbated an already tight oil market.
Concerns that supply might struggle to meet demand if the winter turned out to be cold had during September already sent prices to levels not seen since the 1991 Gulf War.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com )