TEHRAN: Qatar’s Deputy Premier and Minister of Energy and Industry HE Abdullah bin Hamad al-Attiyah said on Monday he is confident the Organisation of Petroleum Exporting Countries will decide to cut output at its meeting on Friday in Vienna and said an $80-$90-a-barrel range for oil prices is “realistic” and will encourage investment in oil producing countries.
“I am confident that Opec will take some sort of measurement. This is what I believe Opec should do,” al-Attiyah told Dow Jones Newswires late on Monday in an interview in Tehran.
A-Attiyah said a possible production cut would fit within a range of 1mn bpd to 3mn bpd.
“There are different numbers - about 1mn, 1mn and a half, 2mn, and 3mn. It’s a range. When we come (to Vienna), we will take these assumptions vis-a-vis the actual numbers for demand and supply,” he said.
Al-Attiyah arrived in Tehran on Monday to attend an event being held yesterday with Iranian Oil Minister Gholam Hossein Nozari and the head of Russian energy giant Gazprom, Alexei Miller.
Opec is set to hold an extraordinary meeting in Vienna on Friday to discuss concerns over oil demand amid the ongoing global financial crisis.
Al-Attiyah said the organisation should look to “balance” the oil market in line with forecasts for declines in global oil demand.
“All the analysts, including the International Energy Agency and others, indicate that (there) will be a slowdown in demand, maybe for the fourth quarter and maybe for the first quarter also,” he said.
In its monthly report released on October 10, the IEA reduced its demand forecast by 240,000 bpd for 2008 and 440,000 bpd for 2009, saying that weaker demand in industrialised countries outweighs lower oil prices. The Paris-based agency warned that global oil demand this year is on course to register its weakest growth in 15 years and is likely to remain weak in 2009.
“We believe the demand will slow down now because of the international economic crisis, and so I think Opec should take some measurement to balance the demand and supply,” al-Attiyah said. “The main thing is not to create a glut in the market,” he added.
Al-Attiyah said an oil price between $80 and $90 a barrel is within a realistic range that will allow Opec to promote investment in production capacity while considering the negative impact of the recent financial crisis on the world economy.
“When I am asked what is the best price today, I am a big believer that $100 a barrel or over $100 (a barrel) is not realistic,” he said, adding that $80-$90 a barrel “is a big reduction” from the previous $147-a-barrel price level and will promote investment within the oil sector.
“Below that (price level), I am afraid that we will see a lot of halts for a lot of projects,” al-Attiyah said.
Crude prices fell below $70 a barrel last Thursday for the first time in more than a year, after hitting a record $147 a barrel earlier in July. Prices have since rebounded back above $70 a barrel.
Light, sweet crude for November delivery settled at $74.25 a barrel on Monday on the New York Mercantile Exchange on the back of speculation that Opec may cut output at the October 24 emergency meeting.
Mohsin Khan, director of Middle East and central Asia at the IMF told Dow Jones Newswires last month that Iran needs oil prices above $90 a barrel and Qatar above $24 a barrel to maintain a fiscal balance. Saudi Arabia, the world’s largest oil exporter, will need crude prices to remain above $49 a barrel to avoid a fiscal deficit, according to Khan.
When asked whether cutting Opec’s oil output could destabilise the world economy in the wake of the current financial crisis, al-Attiyah said Opec is seeking a balance in the oil market that satisfies consumers but meets “real” global oil demand.
“Our aim is not to create any shortage of supply in the world. We would like to see a balance that the consumer is satisfied (with) and that covers all their needs,” Al-Attiyah said.
But “we cannot produce oil where no one will buy it,” he added. – Dow Jones Newswires
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