REPUBLIKA.CO.ID, LONDON - There is no need to panic at the recent drop in oil prices, according to the secretary general of OPEC on Wednesday, saying low prices would curb competing supplies and require the group to pump far more by the end of the decade.
Abdullah al-Badri said output of higher-cost oil supplies such as shale would be curbed if oil remained at around 85 USD a barrel, while the Organization of the Petroleum Exporting Countries enjoys lower costs and will see higher demand for its crude in the longer term.
The comments are a further indication that OPEC, which meets in November to set output policy, has no plan to cut supply in a bid to push prices back up. OPEC members have previously said they wanted oil at around 100 USD a barrel.
"If prices stay at 85 USD, we will see a lot of investment, a lot of oil, going out of the market," Badri said in London at the Oil & Money conference, an annual industry event. "About 65 percent of the producers, they have high costs. Not OPEC."
Brent crude has dropped more than a quarter from above 115 USD per barrel in June as abundant supplies of high-quality oil such as US shale have overwhelmed demand in many markets, filling stocks worldwide. Badri did not say whether OPEC needed to cut oil production at its Nov. 27 meeting in Vienna to support the market, and appealed for calm over the decline in prices.
"We do not see much change in the fundamentals. Demand is still growing, supply is also growing. OPEC is reviewing the situation," he said.
"The most important thing is we should not panic," he said. "Unfortunately, everybody is panicking. We really need to sit, and think and see how this will develop."
Badri declined to specify a level at which oil prices might find a floor, saying OPEC did not have a price target but would instead leave that to the market.
"OPEC's average price will still be 100 USD at the end of this year so we are fine for 2014," he said. "The fundamentals do not reflect this low price."
"OPEC does not have a price target. We must let the market settle down."
Brent was trading around 87 USD by 1220 GMT (8.20 am EDT) after reaching a four-year low of 82.60 USD two weeks ago.
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