OPEC will need to “step in” amid further declines in oil prices, which are fair at US$70 to US$80 a barrel, according to the group’s second-biggest producer.
The organization could still hold back from intervening in the market for one or two years, Iraqi Minister of Oil Adel Abdul-Mahdi said in an interview.
Brent oil dropped about 20 percent since OPEC decided to maintain output at its meeting in Vienna last month.
Global oil supply is growing as the highest US output in at least three decades led to a glut that Qatar estimates at 2 million barrels. Saudi Arabian Minister of Petroleum and Mineral Resources Ali al-Naimi said on Sunday that high-cost producers will have to make cuts if oil prices keep falling while United Arab Emirates Minister of Energy Suhail al-Mazrouei urged producers from outside OPEC to trim output. Iraq’s budget for next year assumes a US$60 per barrel oil price.
“If prices keep falling to very low levels where the whole equation is not balanced, then definitely OPEC has to step in,” Abdul-Mahdi said. He did not say if that would mean cutting production.
OPEC’s decision to hold production was taken after al-Naimi said the 12-nation group must protect its market share and let prices fall to trim output elsewhere, Abdul-Mahdi said.
“We accepted the Saudi theory to correct the situation in the market as it made sense to all of us,” he said.
The “fair price” of oil that was US$100 to US$105 a barrel is now closer to US$70 to US$80 a barrel, Abdul-Mahdi said.
The Iraqi Cabinet two days ago approved a budget based on US$60. Global crude prices dropped about 45 percent this year, heading for the biggest annual decline since 2008.
Saudi Arabia does not plan to pump less “whatever the price is,” al-Naimi told the Middle East Economic Survey in report published on Monday.
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