Kuwait says oil prices to stay high this year

DUBAI, United Arab Emirates (Reuters) -- Kuwait's Oil Minister Saud Nasser al-Sabah was quoted on Thursday as saying oil prices would continue to rise this year with the approach of winter, but might decline at the beginning of next year.

Sheikh Saud also said in an interview with the Saudi-owned pan-Arab al-Hayat daily in Paris where he is holding talks with French officials that Kuwait did not have the capacity to produce at its new quota agreed at the OPEC meeting in Vienna.

Members of the Organisation of Petroleum Exporting Countries agreed at a weekend meeting to raise production by 800,000 barrels per day from October 1, but the move failed to calm soaring oil prices.

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"It is normal from now on for the oil price to continue the trend of rising, especially that winter orders are coming in...The rise in prices will continue with the increase of demand in winter and prices may stabilise or start to decline in January or February," he said.

"The capacity of OPEC to increase production is very limited...We have reached our maximum production capacity," he added.

"There is no way to talk about increasing production from any source to bring prices down because prices will only come down with a decrease in taxes (by Western consumer nations)," he said.

He said only Saudi Arabia and the United Arab Emirates had a margin of extra production capacity.

"We in Kuwait received an extra production quota of 64,000 barrels per day, but we do not have the production capacity to do that," he added.

"We have to talk about the available production capacity. This capacity in OPEC countries is being utilised to the maximum, while Saudi Arabia and the United Arab Emirates have a margin of extra capacity.

"Kuwait does not have an extra production capacity and we are currently producing at maximum capability because we have problems at some gathering centres and we cannot increase one barrel to what we are producing," Sheikh Saud added.

Asked if the next OPEC meeting in November would agree to increase production if prices remained high, the Kuwait oil minister said:

"We did not agree to increase production. We said we will meet on November 12 to evaluate the oil market. I want to ask, if we meet on November 12 and the price was still high what do we do?

"We will apply the price mechanism if the oil price is over $28 a barrel we will increase production by half a million bpd, but who in OPEC can add half a million bpd to its current production?" he asked.

Asked about his comments on oil prices continuing to rise this year, he said: "I called this trend of high prices as a correctional price. The issue is not that of rising prices, it is a correctional move of an oil price which was not fair or just. Let's keep the situation as it is and see how it goes."

Told that current prices were high for consumers, he said: "They are high because of taxes. I have said my point of view. The current price is realistic and normal."

"Whatever we do now, whatever decision we take tomorrow or the day after tomorrow to increase production will not affect the market because it realises that there is no country capable of increasing its production in a big way.

"If some countries took unilateral decisions to increase production it would be up to them, but these countries would not sacrifice the unity of OPEC," Sheikh Saud added.

"We have been clear with all industrial countries including the United States and France, that this is our maximum production capacity and we cannot give more than our production capacity," he said.

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