OPEC secretary urges calm on falling oil prices

Following the continuous drop in the price of oil in the international market, Abdullahi al-Badri, secretary general of the Organisation of Petroleum Exporting Countries (OPEC), says there is no need to panic at the recent drop in oil prices.

Al-Badri made this known at the ‘Oil and Money conference’, an annual industry event in London on Wednesday, saying “low prices would curb competing supplies and require the group to pump far more by the end of the decade.”

He said the output of higher-cost oil supplies such as shale would be curbed if oil remained at around $85 a barrel, while the OPEC enjoys lower costs and would see higher demand for its crude in the longer term

The comments are a further indication that OPEC, which meets in November to set output policy, has no plan to cut supply in a bid to push prices back up. OPEC members have previously said they wanted oil at around $100 a barrel.

“If prices stay at $85, we will see a lot of investment, a lot of oil, going out of the market. About 65 per cent of the producers, they have high costs. not OPEC,” Reuters quoted him as saying.

Brent crude has dropped more than a quarter from above $115 per barrel in June as abundant supplies of high-quality oil such as US shale have overwhelmed demand in many markets, filling stocks worldwide.

Badri did not say whether OPEC needed to cut oil production at its Nov. 27 meeting in Vienna to support the market, and appealed for calm over the decline in prices.

“We do not see much change in the fundamentals. Demand is still growing, supply is also growing. OPEC is reviewing the situation,” he said.

“The most important thing is we should not panic,” he said. “Unfortunately, everybody is panicking. We really need to sit, and think and see how this will develop.”

Badri declined to specify a level at which oil prices might find a floor, saying OPEC did not have a price target but would instead leave that to the market.

“OPEC’s average price will still be $100 at the end of this year so we are fine for 2014,” he said.

“The fundamentals do not reflect this low price. OPEC does not have a price target. We must let the market settle down.”