Recent unrest in the Middle East and North Africa has little impact on oil prices because the market has become "comfortable" with risk, Saudi Arabia's Oil Minister said Wednesday.

Questioned about ongoing violence in Iraq, Libya, Yemen and also Saudi Arabia, Ali al-Naimi replied that there was "very, very small" risk premium in the current oil price.

"This premium is there but fortunately the world is getting very comfortable with the risk," said Naimi, addressing an OPEC seminar before the cartel's output meeting on Friday.

"That is why you see that portion is really very small no matter what is happening ... in the most productive part of the Middle East.

"They don't seem to be affecting production, shipping, demand, supply... The risk premium is there, but it is very very small because of the variabliity of supplies."

This week's production meeting of the Organization of Petroleum Exporting Countries (OPEC) takes place against a backdrop of sharply lower oil prices that have slashed revenues for the cartel's 12 members.

At its last meeting in November, OPEC -- which pumps around 30 percent of the world's oil -- kept its collective production target of 30 million barrels per day.

This was despite a sharp fall in oil prices and was seen as an attempt to maintain OPEC's share of a market flooded by a vast supply glut -- caused partly by booming US shale oil.

The Saudi-backed strategy appears to have paid off, analysts say, with shale oil producers -- which have higher production costs -- squeezed and the oil price recovering in recent months.

However on Wednesday, world oil prices sank by more than a dollar, as oversupply concerns resurfaced.

Market chatter over a possible OPEC output hike also sent the market lower.

In London midday deals, Brent North Sea crude for July shed $1.60 to $63.91 per barrel, compared with Tuesday's closing level.

US benchmark West Texas Intermediate (WTI) for delivery in July lost $1.38 to $59.88 a barrel.

The market has witnessed volatile trade this week. On Tuesday, New York oil prices surged to 2015 highs as the dollar dived on the back of positive eurozone economic data, even as officials at OPEC defended their strategy.
Source: AFP