OPEC minister tips $70 as target oil price

STABILITY FIRST: Oil Ministers were speaking at a Petrotech conference in India. (Getty Images)

Crude oil's fall in recent months would help support a sagging world economy, but needed to be at levels that encouraged investment, two OPEC producers said in New Delhi on Wednesday.

The global financial crisis, the worst since the 1930s, has pushed much of the industrialised world into recession, causing oil demand to slump and crude prices to tumble by more than $100 from its record peak above $147 a barrel last July.

Speaking at a Petrotech conference in India Qatar's oil minister, Abdullah Al Attiyah, suggested a target price of $70 was needed - about 80 percent higher than the current level - to encourage investment.

Saudi oil minister Ali Al Naimi told delegates that oil prices should be stable and more predictable, adding that he was especially committed to the needs of growing Asian markets.

And Angola's deputy oil minister said nobody was happy with the present level of prices.

"Stability means oil prices maintained at a level that encourages investment, helping create a climate conducive for the development of all viable energy sources," Al Naimi said.

On Tuesday, Al Naimi said on the sidelines of the conference that the world's top exporter would cut output next month to below its OPEC target and was prepared to go even further to arrest the fall in prices.

Talks of production cuts and cold weather in the US helped oil rise 3 percent towards $39 a barrel on Wednesday, although it later slipped back below $38 after news of worse-than-expected US retail sales figures that depressed stock markets and hit the dollar.

"The price of oil ... has declined in recent months by more than 70 percent since reaching their highest level in July - a drop that will play a major role in aiding economic recovery," Al Naimi said.

Qatar's Al Attiyah said $70 a barrel was the right price for oil to keep companies and producers investing in new resources.

"Low oil prices will reflect a freeze in investment in new resources. When growth comes back, we will have another shock, as resources will not be there to meet demand," he said.

Al Attiyah said he did not favour very high prices either. "Oil prices over $100 are not logical. I also don't appreciate low oil prices."

OPEC decided to cut supply by two million barrels per day (bpd) at meetings in September and October. In December it agreed to lower output by a further 2.2 million bpd from Jan. 1.

Naimi said oil producers wanted reasonable returns without hurting economic growth.

"Stability also is defined as a level providing a reasonable return to producing nations, and one that does not harm the global economy," Al Naimi said.

He said a meeting of oil producers and consumers at Jeddah in June last year had helped moderate oil prices to an extent.

"This collaboration, combined with the kingdom's moderate price policy, aided price moderation for a short period," Al Naimi said. "However, because of the current worldwide economic and financial downturn, prices decelerated to levels not reflective again of market fundamentals."

Angola's deputy oil minister Anibal Octavio Teixeira da Silva said nobody was happy with the current oil prices.

"That is why OPEC is doing cuts and cuts to see prices will improve," he told Reuters on the sidelines of the conference.

He said Angola would cut output to 1.65 million bpd by early March from 1.8 bpd in line with cuts agreed by OPEC. (Reuters)

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READERS' COMMENTS

Oil price suggested by opec
Posted by Mike Gonzalez, Panama, Panama on Thursday 15 January 2009 at 19:36 UAE time


I dont think that a low oil prices will affect companies investing in this field. Why dont you think in the consumers? Please opec members, keep the prices low so we can feel a relief in our economies.

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