OPEC Chief Claims Oil Will Rebound Higher Than In 2008
OPEC’s secretary-general says the 7-month-old plunge in oil prices finally may have bottomed out and may be ready to rise again. In fact, Abdullah al-Badri hypothesized that a decision by his cartel to cut production conceivably could lead to oil at $200 a barrel.
“Now the prices are around $45 to $55 [per barrel], and I think maybe they reached the bottom and will see some rebound very soon,” al-Badri said Monday in an interview with Reuters in London, and if OPEC cut production, that price certainly would rise, perhaps to unimaginable levels.
“Suppose we cut production, and then we’ll have spare capacity,” he said. “Producers, when they have excess capacity, they will not invest [in new sources of oil]. If they do not invest, there will be no more supply. If there is no more supply there will be a shortage in the market after 3-4 years, and the price will go up and we’ll see a repetition of 2008.”
Related: Did Saudi Arabia Just Flinch?
In a separate interview with The Telegraph, al-Badri recalled that in 2008, a similar lack of investment drove the price of a barrel of oil as high as $147, though it quickly crashed with the onset of the global financial crisis. But in the current climate, he said, the market could “rebound back higher that the $147 we saw in 2008” – perhaps even as high as $200 per barrel.
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