Opec chief sees some price rebound soon

27/01/2015 06:04 AST

Oil prices at current levels may have reached a floor and could move higher very soon, Opec Secretary-General Abdullah al-Badri said yesterday.

“Now the prices are around $45-$55 and I think maybe they reached the bottom and will see some rebound very soon,” al-Badri said in an interview.

Al-Badri warned that any Opec oil supply cut would lead to spare capacity, a lack of investment and an eventual shortage and price spike.

“Suppose we cut production, and then we’ll have spare capacity,” he said in an interview. “Producers when they have excess capacity they will not invest.

“If they do not invest there will be no more supply, if there is no more supply there will be a shortage in the market after 3-4 years and the price will go up and we’ll see a repetition of 2008.”

“Maybe we will go to $200 if there is a real shortage of supply because of the lack of investment,” al-Badri said.

More time was needed before any talk of a change in Opec output policy, he said.

“It will take some time,” al-Badri told Reuters. “It will take another 4-5 months and we will not see some concrete efforts before the end of the first half of the year due to the reason that we will see how the market behaves at the end of the first half of 2015.”

Al-Badri defended the Organisation of the Petroleum Exporting Countries’ November decision to leave its output target unchanged. “It was a collective decision,” he said. “Everybody participated in the decision, there are some remarks and some reservation but at the end of the day all the ministers agreed to this.”

Asked about the prospects for Saudi Arabian oil policy under a new king, al-Badri said: “Saudi Arabia is a stable country, is a stable government, and I think things will be normal.”

Saudi King Salman was quick to retain veteran Oil Minister Ali al-Naimi on Friday, in a message aimed at calming a jittery energy market following the death of King Abdullah.

Reuters