Market forces and the response of high-cost crude producers to the recent fall in prices will determine the cost of oil in the coming months, rather than OPEC, a United Arab Emirates (UAE) oil official said on Tuesday.
Prices have fallen more than 40 per cent since June and Brent crude for January delivery hit $65.33 a barrel on Tuesday, its lowest since September 2009.
“The way I see it, it is the market which will dictate the oil price. Prices are driven by supply and demand … marginal fields are going to set the price,” said Mubarak al-Ketbi, deputy director of the marketing and refining directorate at state-run Abu Dhabi National Oil Co (ADNOC).
“OPEC is not a price setter. The market will set the price,” Ketbi told the Platts Middle East Crude Oil Summit in Dubai, declining to comment later on any specific oil price target for the UAE, a core Gulf OPEC producer.
At a meeting last month, the Organization of the Petroleum Exporting Countries (OPEC) decided against reducing production, despite its own forecasts of a surplus and calls from members including Iran and Venezuela for output cuts to shore up prices.
Rising oil supplies from non-OPEC members such as Russia and U.S. shale producers was a reason cited by several OPEC delegates for keeping the group’s output ceiling unchanged at 30 million barrels per day at last month’s meeting.
“We are facing a new condition for OPEC that has not been faced before. For OPEC to adjust output alone to support prices … is almost impossible in practice,” Mohammed Sadegh Memarian, head of the OPEC research team at the Iranian oil ministry said in Dubai.
“There is the U.S. and Russia… It’s a three dimension (process).”
Memarian said he expected oil prices to rebound to $80 a barrel by the third quarter of 2015 “provided that OPEC sticks to its ceiling of 30 million bpd with no price war.”
On Monday, the head of Kuwait’s state oil company predicted that oil prices were likely to remain around $65 for the next six to seven months, echoing the views of Gulf OPEC delegates who saw oil hovering around $65-70 per barrel for a few months before bouncing back to around $80.