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OPEC Chief Claims Oil Will Rebound Higher Than In 2008

January 27, 2015

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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OPEC Denies Price War, Shows Faith In Markets

December 16, 2014

OPEC Denies Price War, Shows Faith In Markets.

OPEC Secretary-General Abdullah al-Badri is urging the cartel’s 12 members to maintain production and exploration despite a lower demand for oil.

Yet al-Badri told an energy conference in Dubai on Dec. 14 that he is as baffled as anyone why the price of oil has dropped by so much in recent days. “The fundamentals should not lead to this dramatic reduction [in price],” Badri said, according to his Arabic-English interpreter.

As for sustained exploration and production during a period of low demand, al-Badri said such a strategy would prevent a shortage of supply once demand eventually is restored. He said oil customers, particularly the United States, will need OPEC’s oil for years to come.

Related: Iran Leader Says US Not Only Target Of Suspected Saudi Oil Price War

It was the first time that al-Badri had commented on the state of oil prices since Nov. 27, when OPEC, led by Saudi Arabia, refused to cut production levels from 30 million barrels a day in the face of an oil glut and its attendant price drop.

It also was the first comment by anyone in OPEC about thecartel’s own forecast, issued Dec. 9, showing that next year’s demand for oil will decline to 28.9 million barrels per day, 280,000 barrels lower than the previous month’s forecast and the lowest in 12 years. Reports by other energy monitoring agencies show similar drops in demand.

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