DOHA: Oil should be above $70 a barrel to encourage investment in increased production capacity and avoid creating future supply crises, Qatar’s oil minister said yesterday.
Oil prices dipped as concerns about the mounting global economic crisis offset oil producers’ move to cut supplies and China’s stimulus plan.
US light sweet crude oil fell 68 cents to $60.36 a barrel. The oil has tumbled more than 50 percent from its July peak above $147 as the global economic slowdown eats into demand.
“Now what we are seeing is that the oil price went to a level that leads me to be concerned it will create another crisis in the short term or medium term for supply,” Abdullah Bin Hamad Al-Attiyah said on the sidelines of an energy conference in Qatar. “A price below $70 will not encourage companies and oil producers to invest,” he told reporters.
Attiyah said expensive deep water projects and non-conventional projects such as oil sands in Canada were being delayed, as were refining investments worldwide. “Under this scenario, future demand will face a shortage and there will not be enough investment to cope with demand increases,” he said.
“None of us will invest in non-economical projects. The price needs to be above $70 or $75 to ensure producers will invest heavily to meet future demand.” Attiyah said it was too early to say if the OPEC group of oil exporters should cut supply at their meeting in December.
The Organization of the Petroleum Exporting Countries (OPEC) agreed at an emergency meeting on Oct. 24 to chop production by 1.5 million bpd, or around 5 percent, to halt the price slide. The cut has had little effect to date.
