Current oil prices aren't justified by fundamentals, but are rather juiced up by speculation and worries over potential oil-supply disruptions, an Organization of Petroleum Exporting Countries official said Friday.
"This upward movement in prices has been primarily driven by geopolitical factors, amplified by excess speculation," Hasan Qabazard, director of OPEC's research division, said in a statement to the International Monetary Fund.
The IMF said the risk of oil prices spiking on the back of escalating tensions with OPEC producer Iran was one of the major threats to a global economic recovery.
Friday around 1:30 p.m. EDT, front-month crude on the New York Mercantile Exchange traded at $103.49 a barrel, while Brent traded at $118.78 a barrel.
Qabazard said OPEC oil production has seen a steady rise in recent months to 31.3 million barrels a day in March, which "far exceeds the market requirements for OPEC crude oil this year."
Despite geopolitical tensions, the IMF forecasts oil prices to fall marginally this year and next, absent any major supply disruptions.
The OPEC official said crude stocks with the Organization for Economic Cooperation and Development are at comfortable levels, though affected by persistently below average levels in Europe. OECD crude stocks "are expected to see an upward trend, in particular due to high crude oil supply," he said.
Commercial stocks in the OECD stood at more than 58 days' cover at the end of February, Qabazard said.
"That level is not likely to fall significantly, as OECD consumption is expected to continue to decline in the current year," he said. Non-OECD stocks have continued to show a steady increase, particularly in China and India, he added.
-By Ian Talley, Dow Jones Newswires; 202-631-5794; [email protected]