By Daniel Canty from Vienna
OPEC Secretary General Abdallah El-Badri has said an excessively high oil price could hamper the global economic recovery, but the safe level for producers and consumers has not yet been reached.
Speaking exclusively to Arabian OilandGas.com the Secretary General said: “I always encounter the question of what is the right oil price, but truly I don’t have a price tag. OPEC does not want to see a very high price, but neither a low price because overall this increases volatility in the market.”
With oil trading in New York today at $71.07, El-Badri said that a moderate price range best serves the interests of both consumers and producers, and a sustainable and stable price is his goal.
The Secretary General declined to be drawn on an exact figure, but conceeded, “An oil price of up to $80 would not harm world economic growth, and the range $70 – $80 is a moderate price.”
“We saw in 2008 that a very high oil price is not sustainable, and actually increases volatility in the market. A stable price allows OPEC members to invest in new capacity, upstream and downstream – and our members are investing in both at the moment,” he added.
El-Badri said that lessons should be learned from 2008’s volatility, and that safegaurds should be in place to prevent a return to speculative excesses. “We cannot eliminate speculation and we cannot eliminate hedging – these are facts of the market – but guidelines and a standard must be put in place so that excessive speculation and hedging do not negatively impact the oil market.”
With demand projections for the second half of 2009 still well below production capacity, El-Badri said that OPEC member investment is ongoing, but some upstream projects have been shelved. “Right now we have over 150 projects in upstream oil and NGLs, but at this time, because there is excess production capacity, we are postponing 35 projects until after 2013.”
Read the full interview in the July edition of Oil & Gas Middle East.
