Developments in the oil market have taken us with surprise this year. Crude prices hit a historically high nominal level last week. This is a concern to all in this room.

Stability in the oil market is important both for oil importing and oil exporting countries to secure investment and the long-term supply of oil. We have, however, once again experienced how volatile the market can be and how difficult it is to predict oil prices.

We should not let the present high oil prices become a source of tension between oil exporting and oil importing countries. We have all been surprised by the high oil prices this year. The way I view recent developments in the oil market, the high prices can to a large degree be explained by the following:

First of all, the very strong growth in oil demand has been the driving force in the market this year. In particular has the Chinese demand been unexpectedly strong. The demand growth has been significantly underestimated – by everyone. The IEA has for example repeatedly adjusted their demand figures this year.

The US gasoline market – accounting for nearly half of global gasoline demand - has also contributed to high prices.

Increased speculative activity in the oil paper market, has also added several dollars to the crude price.

Furthermore Middle East tensions and terrorist activity has raised concern about the stability of oil supplies, and has built in a significant risk premium in the oil price.

So where will the oil price go from here?
The outlook for the market is uncertain and it is difficult to predict oil prices. More serious unrest in the Middle East could mean even higher prices. However, it looks more likely that oil prices will moderate somewhat in the coming months. The current inventory level should normally reflect a lower price level than we have today. And OPEC is currently talking about increasing quotas and this should contribute to lower prices.

I think most countries represented here today – oil exporting and oil importing countries - will agree that somewhat lower oil prices would be a good thing. After all, we do share a common interest in stable and secure oil markets with prices at a reasonable level, thus ensuring security of demand and security of supply.

Thank you.