The Organisation of the Petroleum Exporting Countries (OPEC) will not be reducing its oil output in order to support prices as the price of oil has fallen to $45 per barrel, says one United Arab Emirates official.
UAE energy minister Suhail bin Mohammed al-Mazroui told a Gulf Intelligence energy conference in Abu Dhabi that he expects high-cost producers to limit their oil output in the near future.
Mazroui was insistent that it will not adhere to OPEC’s calls to other produces to limit their supplies. The UAE energy head noted that it’s the United States shale market, which is quite expensive to perform, that has been driving down the cost of oil over the past several months.
He added that OPEC will not be holding an emergency meeting to take over the situation.
“Everyone needs to make measures but those who are producing the most expensive oil, rationale and rules of the market say they should be the first to pull or reduce the production,” said Mazroui in his remarks Tuesday. “They are supposed to be the swing producers. If the price is right for them to produce … let them produce. If the price is not right, they will not produce.”
As the UAE and Gulf states push ahead with their current levels of production, one Iranian leader suggested that these countries will regret their decision because they could suffer a lot more than Iran, a nation that has pledged to decrease its prices compared to other countries.
“Those that have planned to decrease the prices against other countries, will regret this decision,” Iranian President Hassan Rouhani said in a speech broadcast on state television Tuesday. “If Iran suffers from the drop in oil prices, know that other oil-producing countries such as Saudi Arabia and Kuwait will suffer more than Iran.”
In addition, Venezuelan President Nicolas Maduro visited Saudi Arabia and Qatar to beg for OPEC support on oil prices. Venezuela has been one of the hardest hit victims of falling oil prices as the government has depended on a majority of its revenues from their oil production. The Latin American country now faces a full-blown economic collapse.
In the meantime, Mazroui argued that the market still needs time to make its corrections and help oil prices stabilize. This should happen by the summer, he noted, but he doesn’t expect oil prices to suddenly shoot up when the time comes.
Will we ever see $100?
According to one UAE official, people shouldn’t expect oil prices to ever reach $100 again, which could be bad news for governments like Russia, Venezuela and Nigeria since they need this price to break even and balance the budgets.
Speaking in an interview with the USA Today, Saudi Prince Alwaleed proclaimed that he is certain we will never see $100 oil again. “There’s less demand, and there’s oversupply. And both are recipes for a crash in oil. And that’s what happened. It’s a no-brainer.”
Many observers expect oil prices to start rising by the end of the year because the shale revolution is an expensive endeavor, and businesses are already filing for bankruptcy because they can’t afford to continue operations and pay back the capital they borrowed. Some analysts say the oil-rich Gulf nations are simply biding their time until U.S. producers taper their production efforts.
