OPEC president says oil could decline by $50

29 July 2008

OPEC President and Algeria's oil minister Dr Chakib Khelil told reporters in Jakarta that the downward trend in the prices of oil in the international markets could continue by another $50 a barrel, even as oil prices rose $3 per barrel today.

saying that prices were "too high", Dr Khelil went on to predict that the price fall could be as high as $70 to $80 in the long-term if geopolitical anxieties over continued supplies eased and if the US was able to continue strengthening their dollar.

He also said that OPEC should not consider cutting production inspite of the fall. Admitting that the price at $123 a barrel was too high, the OPEC pressident denied that this was due to any shortages in the supply. He said supply and demand did or change in a day.

When specifically asked whether OPEC members would cut production if oil prices continue to fall, he answered in the negative saying that the oil producers wanted to ensure that there was good supply to satisfy the demand. Dr Khelil also said that the oil producers did not decide the price. "We just meet the demand," he said.

OPEC supplies over 40 per cent of the global oil, and is scheduled to meet in Vienna on 9 September to decide on production quotas after having maintained production levels since its December meeting.

OPEC's largest producer Saudi Arabi had pledged in June to raise production by 200,000 barrels in July after raising it by 300,000 barrels in June.

After meeting Indonesian energy officials in Jakarta, Dr Khelil said the steep price jump in oil was also due to the fact that biofuel mandates in Europe and the United States had aided the run-up in prices as bioethanol was very expensive and had an effect on the per barrel price of oil products.