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PEC official says oil price not to blame for "homemade" US crisis

Business Materials 19 January 2008 16:31 (UTC +04:00)

( dpa ) - High world oil prices are not to blame for the economic crisis facing the United States, OPEC Secretary General Abdalla Salem al-Badri said in an interview published in Germany Saturday.

"If there is a recession, the oil price is not to blame," Badri told Der Spiegel newsmagazine.

He blamed instead the subprime mortgage crisis, along with other financial market problems, insisting the US economic difficulties were "home-made."

Badri's comments came after US President George W Bush called, during a visit to Riyadh on Tuesday, for the Organization of Petroleum Exporting Countries (OPEC) to increase production.

Badri was also critical of the lack of US refinery capacity, saying investment had been insufficient over the past 30 years. "They consume 21 million barrels a day, but they can only process 17 million," he said.

Badri defended OPEC's supply policy, noting that member countries produced 40 per cent of the world's oil and were thus not in a position to control the market.

He dismissed speculation that the oil price could rise to 200 dollars a barrel as "highly improbable" and predicted that oil would be a major energy source for the next century.

Oil production had not yet reached a peak and would not do so in the near future, Badri told Der Spiegel.

In connection with recent price levels around 100 dollars, he said only one major dealer had paid prices at this level and that dealer had lost money.

He further noted that the dollar oil price reflected a sharp decline in the value of the US currency and said there had been "a lively discussion" within OPEC in November over switching to the euro, as suggested by OPEC members Venezuela and Iran.

Badri declined to comment on a suggestion that Russia could join OPEC and said that President Vladimir Putin's proposal to Algeria, Iran and Qatar on a gas cartel had only long-term prospects, as gas suppliers were generally tied into contracts for as long as 30 years.

Badri described oil multinationals, such as Exxon, Shell and BP, as "dinosaurs" facing a changing world, urging them to train more local expertise and invest more in new technologies and in finding new resources.

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