(MENAFN - Arab Times) Tensions in the Middle East, as well as speculation, are behind recent increases in oil prices, two Gulf oil ministers said on Tuesday.
"There is a lot of tension in oil-producing countries," said the energy minister of the United Arab Emirates, Mohammad bin Dhaen al-Hamli, on the sidelines of the International Energy Forum in Kuwait.
"That I think is reflected in oil prices," he told reporters.
Bahrain's Abdul Hussein Mirza said crude prices were volatile due to geopolitical concerns and market speculation that should be tackled.
"The volatility is not due to supply or demand. It is due to speculation mainly, and the geopolitical situation," he said.
He called for "some control on speculation" and an agreement over "measures that can be taken to reduce the speculation in the market," he said.
Asked if he thought oil prices were too high at their current levels at around 106 for the West Texas Intermediate, Mirza, whose country has dwindling oil resources, said a 100 per barrel is the "fair" price for crude.
Oil ministers and delegates from the 88-member IEF are holding their biennial three-day gathering in Kuwait to discuss the role of the forum in tackling market volatility.
Tensions have escalated in the Gulf due a standoff between and Iran and the West, which imposed sanctions on Tehran over its nuclear programme that the West fears could be leading to developing atomic weapons.
Iranian officials threatened to close the strategic Strait of Hormuz if sanctions imposed by the European Union affect its exports of oil.
On March 1, WTI crude hit 110.50 per barrel, the highest since May 2011, while Brent North Sea crude rocketed to 128.40 a barrel, the highest since July 2009.
The United States meanwhile is pressing Saudi Arabia to boost oil output to fill a likely supply gap arising from sanctions on Iran, Gulf sources told Reuters, adding that such an increase is unlikely before July.
"There were talks held between Saudi and the US and the US asked if Saudi could be accommodating once the sanctions take effect in July. And the Saudi response was that it was ready to meet demand in the market if required, but would not like to take part in the politics," one Gulf official said.
A European Union embargo on Iranian crude takes effect on July 1. US and European financial sanctions have made it difficult for other importing nations to process payments for Iranian crude.
"There will not be any surprises in Saudi production over the coming few months, we are yet to see what demand in April will be. But generally production will stay up or down 200,000 barrels per day from the current 9.8 (million bpd)," the official said.
"The situation is still not clear, by July there will be a clearer picture," another Gulf source said.
Kuwait has actively endeavored to bring fruition to the dialogue between energy producing and consuming nations ever since its inception in Paris in 1991, said His Highness the Amir, opening the 13th ministerial meeting of the International Energy Forum (IEF) here Tuesday.
Welcoming delegates of the forum, being held under the theme "Effective Dialogue, Best Means for Energy Security," His Highness Sheikh Sabah al-Ahmad al-Jaber al-Sabah said in a speech that Kuwait has been taking part in this dialogue since 1991, becoming eventually a member of the forum's executive council, all the while keeping in mind the importance of the forum as a viable vehicle for purposeful dialogue between energy producing and consuming nations.
The forum takes its paramount significance in that it embraces under one canopy organizations that look after the interests of energy consuming nations, such as the International Energy Agency, and those that address the concerns of the producing nations, such as OPEC, both these organizations being active participants with the IEF, indicated HH the Amir.
He further emphasized that Kuwait has always paid heed to forums such as the IEF, which brings together consuming and producing nations, national and local energy companies, international oil firms, in addition to world organizations that focus on oil and energy issues, he said, adding that for that reason and others Kuwait believes strongly in exchanging expertise and viewpoints on energy issues.
Kuwait's dedication to dialogue on energy issues is manifested in its visible role in OPEC, which pursues a policy of stabilizing oil prices and supplying energy to international oil markets at manageable prices, enabling the producing countries thus to employ oil revenues for their economic growth and future development plans, said HH the Amir.
Furthermore, he pointed out that the oil industry worldwide faces great challenges in the near future that might be instigated by gyrations in oil prices, economic downturns, ensuring safe open- sea navigation, fighting piracy, illegal immigration, seaport and airport safety, and the need for enormous investment in the energy sector to counter increasing demand for energy.
Sheikh Sabah noted that Kuwait envisioned for the future using oil wealth to realize objectives of sustainable development and growth, with the emphasis on nurturing human resources, while at the same time protecting the environment through the judicious use of oil in an environmentally-friendly manner and working toward the production of alternative energy sources.
He concluded his speech to the forum by urging its participants to seek workable solutions that induce stability to world oil markets and further cooperation among energy consuming and producing nations and oil companies and energy research centers.
Minister of Oil Hani Hussein stressed the importance of consolidating efforts of energy producing and consuming countries in order to guarantee safe, clean and secure energy to people around the world.
During his speech at the 13th International Energy Forum, Minister Hussein said, "We are proud of the fact that Kuwait is hosting this distinctive event which is born out of 20 years of dialogue, and is considered the first since signing the forum's charter. We are pleased with this big participation of 600 delegates that represent 76 countries, 15 international organizations, and 32 oil companies."
"The last 20 years have witnessed a remarkable development of dialogue between producers and consumers, in which the international energy forum had a prominent role in bringing points of view closer and creating a climate of joint understanding between producers and consumers on various energy issues," pointed out Hussein.
He added, "Those efforts were culminated by signing the forum's charter in Riyadh a year ago. Therefore, holding the 13th forum in Kuwait, which is the first since signing the forum's charter, is without any doubt an important step in the path of further documentation and consolidating of this dialogue."
"The importance of this forum is highlighted by its coinciding with essential political and economic developments that influenced the stability pace of energy markets, oil prices, and global economy recovery," stressed the Minister of oil.
Minister Hussein explained, "Our interest in dialogue stems from the vital role of energy in all aspects of our daily life, as well as it is being the main engine for global economy. However, there are still unfortunately more than billions of people around the world who are deprived of energy.
Kuwait Petroleum Corp and France's Total on Tuesday signed a memorandum of understanding to be partners in a Kuwait-China oil refinery joint venture, the French energy giant said.
The joint venture, in partnership with China's Sinopec, will develop a refinery with a processing capacity of 300,000 barrels per day, in addition to a petrochemical complex, Total said in a statement on the sidelines of the International Energy Forum in Kuwait.
The complex to be built in Zhanjiang, in China's southern Guangdong province, will process Kuwaiti crude oil.
Kuwait Petroleum International (KPI), KPC's international arm, and China's state-owned Sinopec signed an agreement more than two years ago to build the 9 billion (6.9 billion euro) complex.
"This agreement will be the keystone of a long-term relationship with KPC," Total chief executive officer Christophe de Margerie said in the statement.
"The project is in line with our strategy of expanding in growth markets, based on a few highly competitive and integrated platforms," he said.
KPC chief executive officer, Farouk al-Zanki, also hailed the state-owned group's new cooperation with Total.
"Total, with its long experience in the downstream business in China coupled with know how in refining and petrochemical operations, will add value to the China project," he said in the statement.
The Total chief told reporters in Kuwait on Tuesday that the French group's share of the whole venture will be at 20 percent, while KPC will hold 30 percent.
"In the end, Total will have 20 (percent of the complex), KPC 30 (percent) and Sinopec 50 (percent)," he said.
South Africa hopes to have a plan by the end of May for replacing Iranian crude that currently makes up a quarter of its crude imports, the country's energy minister told Reuters.
The United States has pressured many of Iran's biggest oil buyers in Asia to reduce their purchases in a Western push to starve Tehran of funds for its disputed nuclear programme.
Iran is South Africa's leading crude supplier, making up about 29 percent of imports by Africa's biggest economy, according to the US Energy Information Administration.
US energy officials visited South Africa in January but did not make any formal request to halt or reduce Iranian crude imports, South African officials say.
"I would be lying if I said that the United States is putting pressure on us to cut Iran imports... but we are considering different avenues now," Elizabeth Dipuo Peters told Reuters on the sidelines of the International Energy Forum in Kuwait.
"We have given ourselves till the end of May to come up with alternatives, and we are engaging in talks with everyone, including Iran," she said in an interview, adding that she had recently visited Tehran to discuss the issue.
Oil traders say Iran may have to offer steep discounts to keep its customers buying as pressure from Washington and Europe on Iran builds.
Iran has not offered South Africa cheaper oil to persuade it to buy more, Peters said, but South Africa will need to find cost-effective alternatives to wean itself off Iranian oil.
"Price is certainly a concern for us and looking at the other options we have to consider the price," she said.
Many refineries in the country, including the privately-held Engen refinery, are designed to treat Iranian crude and adjusting them to handle others would be costly.
"We are worried about (Engen) that's why we are engaging in talks with the owners and everybody else," she said, adding that Venezuela could offer a viable alternative to Iranian crude.