Kuwait Say Rise in Oil Prices Are “Unjustified”

Kuwait’s prime minister told the U.N. General Assembly on Thursday that the big rise in oil prices was "unjustified" but beyond the control of producers.

"The unjustified rise in prices, which is a source of concern, is caused by factors that are out of the control of the producing countries," Sheikh Nasser al-Mohammad al-Sabah, leader of the OPEC oil producing country said.

"Kuwait continues to follow a balanced oil policy, which takes into consideration the interests of the consuming as well as the producing ones, as well as maintain the stability of prices in the world market," he said. The Gulf nation is the world's seventh largest crude exporter.

November U.S. light crude CLX8 rose $2.29, or 2.17 percent, to settle at $108.02 a barrel on Thursday on the New York Mercantile Exchange (NYMEX).

The factors pushing petroleum prices higher "include speculations, additional taxes on fuel, the lack of construction of new refineries, as well as, upgrading existing ones," Sheikh Nasser said. "The continued presence of all of these factors lead to the exacerbation of the economic crises and to the rise in the rates of inflation in the developing countries."

Members of the OPEC agreed this month to adhere more closely to the group's output targets, which would effectively cut supply by around 500,000 barrels per day.

Kuwait, a core Gulf Arab producer with about a tenth of global oil reserves, boosted its petroleum output to 2.8 million barrels per day in July to help cool oil prices.

The Kuwaiti premier expressed his country's "deep concern over the financial crisis in world markets," and said his country welcomed the $700 billion Wall Street bailout plan being discussed by the U.S. government.

"We welcome ... the bold steps and actions taken by the U.S. government to address the mortgage crisis aimed at putting an end to its negative effects, not only on the U.S. economy, but also on the various economies of the other states in the world," Sheikh Nasser said.

Kuwait's multi-billion-dollar sovereign wealth fund, Kuwait Investment Authority (KIA), invested $5 billion in January into Citigroup and Merrill Lynch. Merrill has since been bought by Bank of America. It was criticized by lawmakers for pouring Kuwait's wealth into shares of troubled financial institutions.

Author: Jo Amey