Dubai: Oil prices may drop to as low as the mid-$20s a barrel unless Organisation of Petroleum Exporting Countries (Opec) takes action to stabilise the market, Venezuelan Oil Minister Eulogio Del Pino said.
Venezuela is urging the Organisation of Petroleum Exporting Countries to adopt an “equilibrium price” that covers the cost of new investment in production capacity, Del Pino told reporters on Sunday in Tehran. Saudi Arabia and Qatar are considering his country’s proposal for an equilibrium price at $88 a barrel, he said.
Opec ministers plan to meet on December 4 to assess the producer group’s output policy amid a global supply glut that has pushed down crude prices by 45 per cent in the last 12 months. Opec supplies about 40 per cent of the world’s production and has exceeded its official output ceiling of 30 million barrels a day for 17 months as it defends its share of the market.
“We cannot allow that the market continue controlling the price,” Del Pino said. “The principles of Opec were to act on the price of the crude oil, and we need to go back to the principles of Opec.”
Oil slumped on Monday amid a broader commodity rout as the dollar gained, making commodities priced in the greenback more expensive. Brent for January settlement fell as much as $1.09, or 2.4 per cent, to $43.57 a barrel on the London-based ICE Futures Europe exchange. The West Texas Intermediate contract for the same month, the US marker grade, lost as much as 3.3 per cent to $40.50 a barrel.
Opec ministers will meet informally on Dec. 3 in Vienna, a day before the group’s formal session, Del Pino said.
Venezuelan President Nicolas Maduro is scheduled to meet Russian President Vladimir Putin in Tehran on Monday to work together on oil prices, he said on state television earlier this month. Russia, which isn’t a member of Opec, is facing competition in Europe after Saudi Arabia reduced pricing for buyers in northwest Europe and started selling in established Russian markets such as Poland.
Saudi Arabia also reclaimed its position from Russia as the largest crude supplier to China, where it sold 3.99 million metric tons in October, 0.8 per cent more than in September, data from the Beijing-based General Administration of Customs showed Monday. Russia supplied 3.41 million tons to China last month, a 16 per cent drop from a record in September, according to the data.
Venezuela lobbied Russia last year as it sought to coordinate action with non-OPEC producers to halt the collapse in oil prices. Global supply and demand is best balanced by the market, Russian Energy Minister Alexander Novak said Saturday in Tehran.
