A leading oil official has warned oil producing nations that their target of between US$70 and $80 for a barrel of oil is unrealistic in the current climate and that some of the demand for oil has been lost forever.
Fadhil Chalabi, who works for the London-based Centre for Global Energy Studies (CGES) told news agency Reuters that the record price of $147 for a barrel of oil achieved last year has prompted many developed nations into actively seeking energy alternatives.
“One thing is certain, when the price went to $147.27 that created a shock among consumers. It made them feel they had to make economies and increase efficiency,” Reuters reported Chalabi as saying.
“I believe that even after the recession, oil demand will be weak, except in China and India,” he added.
Chalabi is a respected expert in the hydrocarbons industry having previously worked in the Iraq Oil Ministry and for the 12-nation oil cartel OPEC. He left his post with OPEC to lead CGES, a not for profit energy research institute.
The oil price has been rising in recent weeks and currently stands at just over $59. Chalabi believes this price is acceptable for most Gulf states, but would not be acceptable for states with massive investment plans that rely on the oil price being high.
“OPEC is facing a dilemma because these countries have generated requirements which are increasing over time. Countries like Iran, Venezuela … are in difficulties,” Chalabi is reported as saying.
Most OPEC nations have huge amounts of oil currently in storage either onshore or on crude carriers offshore. ArabianOilandGas recently reported that the state-owned oil company ADNOC was looking into the possibility of chartering crude carriers for this purpose.
The huge stockpiles of oil has led to some OPEC members, including Venezuela and Iran calling for further production cuts when the cartel meets later this month.
