JAKARTA - The "Iraq problem" may stop world oil prices falling from their current highs over the long term, OPEC president Purnomo Yusgiantoro said Monday.
"In 2005, it is predicted that oil prices will weaken, we see that there are indications of that but because of the Iraq problem there are indications again that they will rise," he told reporters.
The benchmark New York light, sweet crude contract for July rose late last week on news of bloody attacks in Iraq, the sabotaging of oil pipelines in the south of the country and the beheading of a kidnapped American worker in Saudi Arabia.
The contract fell in Asian trading Monday.
Yusgiantoro, who is also Indonesia's energy minister, said most members of the Organisation of Petroleum Exporting Countries (OPEC) are producing at top capacity but world prices remain high, mostly because of non-fundamental factors.
"What is clear is that OPEC production is currently at its maximum; only one or two countries in the Middle East have spare capacity left," he said.
OPEC has also asked non-member producers to raise output to push down prices but Yusgiantoro said so far "there has been no signal from them."
However, he said he was certain they would heed the call because it came not only from the cartel but also from developing countries.
OPEC itself has pledged to increase output by 2.5 million barrels a day by August 1. Non-OPEC producers account for about 60 percent of global production.
Yusgiantoro said it was hard to predict oil prices for the summer season because of non-fundamental factors.
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