By Anayo Korie / Ag Energy Editor
OPEC Secretary General Abdalla El-Badri has called for calm over tumbling oil prices, saying fundamentals of supply and demand did not justify the extent of the slide and that OPEC crude output was unlikely to be significantly different in 2015 from that of the current year.
Badri, who breifed newsmen in London,over the weekend said he was not predicting the result of the oil producer group’s November 27 meeting and that it will be the duty of Ministers of Member states to decide at that time whether action is necessary to respond to the $30 barrel fall in oil prices over the past four months.
However, his remarks appeared to suggest that OPEC may not be in a hurry to rein in its own barrels to support oil prices at levels conducive to the production of the US tight oil that will absorb all the growth in world oil demand this year and next.
Badri observed that if prices remained around $85 per barrel , a lot of oil would be forced out of the market, including 50 per cen of US light tight oil production. He said, OPEC members were not engaged in a price war and that recent cuts in official prices to term lifters by some member countries were simply a response to what was happening in the market.
There is “no price war,” Badri who spoke on the sideline at the just concluded Annual Oil & Money conference in London, said.
ConocoPhillips’ chief economist, Marianne Kah, said very little US tight oil production would be lost at a WTI crude price of around $80 per barrel and that prices would have to drop to $50 barrels to halt production growth.
According to her 80 per cent of US tight oil projects have a breakeven price of between $40 and $80 per a barrel WTI, Kah said. Badri, however, said he stood by his view that a continuation of prices at current levels would reduce US tight oil production by half. “No one can tell me the breakeven price for US shale oil is from $40 to $80 per barrel ,” he said.
Noticeably absent from the general debate over the direction of oil prices and the state of the market has been Saudi Arabia, whose last public pronouncement on the issue came on September 29 in the form of a speech to a Bahrain conference by Ibrahim al-Muhanna, adviser to oil Minister Ali Naimi.
Oil prices, Muhanna said, were unlikely to fall below $90/b because of the high cost of producing shale oil and that any dip below this level “would be for a short time before going back to the level of around $100/b.At the time, Brent crude was trading around $96-$97per a barrel.
Saudi Arabia’s near-term view, Muhanna said, was that world oil markets would remain stable in terms of prices, with a balance between supply and demand.”What we have seen over the last five years will likely continue for another five years, and maybe beyond,” he said. Saudi oil Minister, Ali Naimi last commented publicly on oil prices on September 11, during the same week in which Brent moved below $100/b for the first time since June 2013.
Source : Independent