An Arab oil analyst has said OPEC could force the price of oil up to US$70 a barrel if it complies with agreed cuts in production.
Writing in his company’s monthly magazine, Arab Oil and Gas, Nicolas Sarkis, director of the Paris-based Arab Petroleum Research Centre (APRC), said that he believed OPEC was sincere in its desire to curb oil output in order to avoid further price reductions and all 12 members were making an effort to do so.
Sarkis went on to say that recent reductions from big OPEC producers, such as Saudi Arabia, were already having an effect on the market and had managed to sustain prices at around the $40 mark. Prices have dropped by around $100 a barrel in recent months due to the global economic downturn.
“Despite these factors underpinning the market, the recovery in prices is still running up against considerable resistance,” Sarkis said. “[This is] due essentially to the very high level stocks, which were estimated to stand at 2,650 billion barrels in OECD [Organisation for Economic Co-operation and Development] countries at the end of December, to the fall in world demand, which is expected to be one million barrels per day down in 2009, and to the gloomy prospects for the world economy.”
Sarkis went on to say that he believed that there was still a long way to go before any significant price rise occurred.
“Oil exporting countries will still have to make great efforts and it will be a long time before crude prices return to the desired level of around $70 a barrel,” he said. “This objective could be progressively attained between now and 2010, if supply restrictions are sufficient and if OPEC member countries are resolved to abide by their commitments to curb supplies.”
Quoting independent estimates Sarkis said OPEC’s total production fell to around 30 million bpd in January from 32.1 million bpd in September and October of last year.
