DETROIT (Reuters) - U.S. Energy Secretary Spencer Abraham (news - web sites) on Thursday ruled out using this week's top-level energy meeting to urge Russia to abandon oil supply curbs despite his government's own forecasts that world crude prices could surge and threaten economic recovery.
Abraham meets Thursday and Friday with Russian oil minister Igor Yusufov, whose country, the world's second-largest oil exporter, agreed to cut output in concert with OPEC (news - web sites) members late last year. The two are in Detroit for an energy meeting of the Group of Eight richest countries.
"We've never, as a matter of policy in the Bush administration, deplored, begged or cajoled anybody to produce more oil. Those decisions people make based on the market," Abraham said ahead of the meeting.
However, Canadian Natural Resources Minister Herb Dhaliwal said the other top G8 energy officials will likely appeal to Russia to fully open its taps in June to help cool prices.
The Energy Information Administration (EIA), the U.S. Department of Energy (news - web sites)'s statistics arm, has predicted oil prices could top $30 a barrel in the second half of this year unless the Organization of Petroleum Exporting Countries (OPEC) and other big producers, such as Russia, Norway and Mexico, loosen their recent supply cuts.
Governments and central bankers worldwide have stressed that skyrocketing crude prices are the biggest threat to a fragile economic recovery.
"We would assume, whether it's Russia or it's the OPEC countries or anybody else would see the forecast the EIA's put out and probably reach the same conclusions -- that there will be a significant increase in demand as there typically is between the end of the first quarter of the year and by the third and fourth quarter," Abraham said.
Oil prices have jumped by about a third this year to around $26 a barrel, due to the cuts among major producers, rising demand as the economy improves and market jitters over violence in the Middle East.
Russia, though not an OPEC member, agreed with the cartel to reduce its exports by 150,000 barrels a day, or 5 percent, from January to June. Deputy Prime Minister Viktor Khristenko told Reuters in April that Russia had no plans to keep a lid on oil output in a long-term energy strategy.
Since the start of 2001, OPEC members and their allies have reduced quotas by 5 million barrels a day.
Abraham and Dahliwal, co-hosts of the G8 energy meeting, have said energy security and the impact of higher oil prices on the world's economy would be key topics at the gathering, which starts in earnest on Friday.
'IMPORTANT TO INSURE STABILITY'
"For Russia and the other producing countries, I think it's important to them to have stability because once you get volatility, you get people making decisions based on short-term prices and you create economic problems for certain countries," Dhaliwal told reporters.
Asked if he would urge his Yusufov to scrap the cuts, Dhaliwal said: "I'm sure that others will express the view of that nature, that it's important for the producing countries to insure there's stability."
The meeting in the heartland of the U.S. auto industry is one of several ministerial meetings leading up to the summit of G8 leaders in Kananaskis, Alberta in June. The other G8 members are Britain, Germany, Italy, France and Japan.
Daniel Yergin, chairman of Cambridge Energy Research Associates, said he believed Russia was wary of a collapse in oil prices when it agreed to the cuts, but that the strengthening economy has lessened fears.
"The U.S. economy appears to have recovered more quickly, and thus has put a higher floor under demand so there's going to be a critical need, if we are on a path of economic recovery, for more oil to come onto the market at least by the summer time," said Yergin, author of the sweeping oil industry history "The Prize."
He also said he believed oil prices currently have a "fear and anxiety" premium of $4-$6 a barrel built in as a result of the Middle East turmoil.
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