Opec oil output will not be cut even if price hits $20

His comments reinforce Opec’s recent policy change away from restricting output as prices fall.

In November, Opec [Organization of the Petroleum Exporting Countries] said it would keep its target output at 30 million barrels per day.

The Brent crude oil price has fallen by more than 46% since its $116 June peak.

Speaking to the Middle East Economic Survey, Mr al-Naimi said: “As a policy for Opec – and I convinced Opec of this, even Mr al-Badri [Opec secretary general] is now convinced – it is not in the interest of Opec producers to cut their production, whatever the price is.

“Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he said.

The world might not see the oil price back at $100 a barrel again, he added.

While alternative sources of crude oil, such as shale and tar sands, have caused a big increase in supply, some analysts argue that the oil price collapse is more to do with falling demand due to a slowing global economy.

Danny Gabay of Fathom Financial Consulting told the BBC that the oil price fall was “overwhelmingly, predominantly, if not entirely, a demand shock. It’s China slowing down. The supply element is more of a reaction.”

International Monetary Fund (IMF) economists have speculated that the low oil price could boost the global economy by up to 0.7% in 2015.

“Overall, we see this as a shot in the arm for the global economy,” said Olivier Blanchard, the IMF’s chief economist.

Similarly, Opec producers believe the oil price could return to about $70 or $80 by the end of 2015 as global economic recovery boosts demand.






 

Leave a Reply

Reset password

Enter your email address and we will send you a link to change your password.

Get started with your account

to save your favourite homes and more

Sign up with email

Get started with your account

to save your favourite homes and more

By clicking the «SIGN UP» button you agree to the Terms of Use and Privacy Policy
Powered by Estatik
error: Content is protected !!