"OPEC's role to shift prices is limited because of the weakness in its spare production capacity which, estimated at one to 1.5 million barrels per day (bpd), constitutes heavy crude" that is not sought after by refineries, analyst Walid Khadduri told AFP. 

However, the Organisation of Petroleum Exporting Countries remains a sizeable force in the world economy, to which it provides 30 to 80 million bpd of crude, said Khadduri, chief editor of the Middle East Economic Survey (MEES), based in Nicosia. 

Crude oil futures jumped to a record high closing on the New York Mercantile Exchange on Friday, as markets fretted over tight US supplies despite a decision to release small amounts from a strategic reserve. 

Light sweet crude

The November contract for light sweet crude climbed 42 cents to $48.88 a barrel at the close. The latest price eclipsed the prior all-time record close on 19 August of $48.70 and neared the intra-day record of $49.40 on 20 August. 

In London, the price of benchmark Brent North Sea crude oil for delivery in November gained 20 cents to close at $45.33 a barrel a day after reaching a new intra-day record of $45.75. 

OPEC declared in Vienna on 15 September it was lifting its official production ceiling by one million barrels daily to 27 million bpd from 1 November. 

But the decision left markets unmoved and has so far failed to bring down prices. 

Lacking capacity

"OPEC does not have the capacity to influence the oil market ... which did not react to its decision to increase its production ceiling," said Kuwaiti analyst Kamal Abd Allah al-Harmi. 

Khadduri says price increase is
due to fears over future capacity

"OPEC is no longer able to impose a balance on the market, on which the cartel has lost its influence because it no longer has the spare production capacity" sufficient to do so, he added. 

According to al-Harmi, the market needs light crude, produced notably by Libya, Algeria and Nigeria. Western refineries, notably American, do not want to use heavy crude which is produced by Gulf states and which constitutes OPEC's spare capacity, he said. 

The general view is that the quantity of oil in circulation is sufficient to immediately supply the market. But the spare capacity of producer countries, which is not providing a "security cushion" in the event of a disruption to production by any one of them, is at its lowest. 

Many years needed

"OPEC is not responsible for the rise in prices and is not able to lower" this upward trend, said Abd Al-Wahab Abu Dahish, who heads investment research at the Riyadh Bank in Saudi Arabia. 

"OPEC is not responsible for the rise in prices and is not able to lower" this upward trend

Abd Al-Wahab Abu Dahish,  Researcher at the Riyadh Bank

"According to expectations, OPEC and non-OPEC producer countries will need many years to increase their production capacity to a level which can reassure the market," said Abu Dahish. 

"Many producers did not invest in their oil sector during the 80s and 90s, marked by a fall in oil prices," he said. 

Khadduri attributed the increase in prices to fears over future production capacity and geopolitical and climatic factors. 

The Centre for Global Energy Studies warned last week that the course of oil prices is "largely out of the hands" of both OPEC and the international energy industry, with markets set to remain tight over the coming months.