Global oil prices will not languish at 11-year lows of $35 per barrel for much longer, the Organisation of Petroleum Exporting Countries (OPEC) said on Tuesday.
“We are not looking at a higher price and not also looking for a lower price. And we are looking for a fair price because we know higher price for a few years is good for producers but will not be good for consumers. And it will be vice-versa,” said OPEC secretary general Abdallah El-Badri, here for the first institutional dialogue between India and OPEC. “This (price scenario) will not continue. In a year or so, it will change.”
He said OPEC has not cut output to keep oil prices supplied despite rates hitting to 11-year low of less than $35 per barrel.
El-Badri further said the fair price means a rate where OPEC nations have a decent income. “Also, where we can invest, investment to have more supplies to the consumers.”
His comments come even as reports from Europe say that OPEC may hold an emergency meeting to steady oil prices.
El-Badri said that because of the crash in global crude oil prices, investments in exploration and production had gone down by $130 billion, which means there would be no more supplies coming in years to come. “If there is no more supplies, there will be less supply to the market. Less supply to market means, there will be higher prices.”
The Vienna-based 13 member cartel of oil exporting countries, says a cut-back on investments on exploration in the non-OPEC countries would mean that their production would fall by up to 400,000 barrels per day in 2016.
India, which imports 85% of its oil supplies and 95% of gas from OPEC nations, has asked the oil cartel for a “reasonable and responsible” price regime, oil minister Dharmendra Pradhan said after meeting El-Badri. “We gave him the perspective of major buyer of crude and market. We feel a reasonable and responsible price will best serve the world economy,.”
Oil prices, which were hovering around $95-105 in January 2014, began declining around October last year and have been on a downward spiral since then.
Although, low prices would mean that India could save more than Rs 2 lakh crore on crude imports this year, some of the gains have been mitigated because of a steep depreciation in the Indian rupee against the US dollar from around Rs 64 levels in January this year to Rs 67 levels now.
Several analysts and brokerages have said that oil prices could go down further. In September this year, US based investment bank Goldman Sachs had said that oil could go down to $20 per barrel levels next year.