Energy chiefs absolve oil speculators

Speculators are not to blame for the steep rise in oil prices, executives of three of Europe’s biggest energy companies said on Monday, adding to a growing industry consensus that tight supply and high demand are the culprits.

Opec ministers have promoted the idea that speculators are pushing up prices as part of attempts to deflect blame for the recent doubling in the cost of crude. On Monday, prices hit a fresh record high of almost $144 a barrel.

US lawmakers have lent credibility to the argument that speculators are at fault by launching hearings on the matter.

But chief executives of oil companies are becoming vocal about dismissing the link between speculators and oil prices.

Jeroen van der Veer, chief executive of Royal Dutch Shell, Europe’s biggest international, integrated energy group, said on Monday: “We don’t think that the financial markets are leading the speculation. Probably they follow what other people fear as long-term fundamentals.”

He was speaking in Madrid at the World Petroleum Congress, an industry convention held every three years.

The executives pointed to a supply squeeze as political barriers prevented them and others from tapping large deposits of oil, many of which were jealously guarded by national groups.

Antonio Brufau, of Repsol of Spain, blamed lack of supply and high taxes, saying: “The fundamentals in the industry are the significant reasons for having these prices.”

Tony Hayward, chief executive of BP, the only one of the three European companies to have a large trading desk engaging in speculative buying and selling, said: “This is a fundamental signal; this is not about speculation. Supply is not responding adequately to rising demand.”

The warning came as West Texas Intermediate oil on Monday surged to a record high of $143.67 in New York and Brent crude oil hit $143.91 in London.

WTI prices later pared gains, rising in early afternoon trading $1.67 to $141.88 a barrel.

Harry Tchilinguirian, oil analyst at BNP Paribas in London, said the market was rising on the back of “an escalation of rhetoric” over Israel and Iran. At the weekend, Tehran said it would close the Strait of Hormuz, a waterway in the Gulf vital for oil exports, if attacked by Israel.

The International Energy Agency, the developed countries’ oil watchdog, has maintained that speculators are not able to influence prices in anything but the very short term.

The IEA will on Tuesday publish its forecasts for the next five years

Additional reporting by Javier Blas in London

EDITOR’S CHOICE

Shares hit as fears grow over financial turmoil – Jun-27

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