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Opec says oil could hit $200 a barrel

The price of crude oil could bounce back to as high as $200 a barrel without sufficient investment to develop new fields, Opec has warned.

Speaking with The Telegraph, Opec secretary general Abdalla Salem el-Badri says any production cuts would lead to rampant price increases.

Oil companies have been forced to make cutbacks by the slide in oil prices, with BP announcing more than 1,000 job cuts since December.

But el-Badri says: “If we cut production then there will be spare capacity and producers will not invest, or postpone projects. The market will rebound back higher than the $147 we saw in 2008.”

The price of Brent crude oil is currently at $48 a barrel, down 57 per cent from $112 in June, having slipped again on Monday following the death of Saudi ruler King Abdullah.

Much of the decline in oil prices since the summer has been blamed on Opec’s decision to maintain production levels in November.

In recent times Opec has tackled a declining market share by allowing prices to fall to eliminate rival producers including Russia and the US.

The International Energy Agency says production in non-Opec countries has begun to slow, with the watchdog revising down its estimate by 350,000 barrel per day. The US oil rig count also saw its sharpest weekly fall in 24 years earlier this month.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Decimal point in the wrong place again…. that said, forget Goldmans who are as wrong as they were at $129 – $70 or so is a fair and sustainable general level all things considered, including investment for extraction.

  2. correlationstreet 27th January 2015 at 10:10 am

    It’s come to a fair state of things when I open an article to double check whether the oil price estimate was $20 or $200 both of which could be argued for by somebody with enough imagination/delusion take your pick.

  3. There are two main factors why oil prices are where they are:

    1: US shale producers have managed to put pressure on OPEC for the first time in decades which is why OPEC is having to carry on pumping oil to maintain market share.

    2: The second is probably the most important and that is no oil trader is going to try and fix the price of oil as they have seen what happens to people that try and fix markets. Not saying there is fixing in the oil markets, just pointing out there has been fixing in other markets eg LIBOR and foreign exchange markets.

    The last factor is probably the biggest reasons why oil prices are more in line with the world economy, does beg the question though – What the hell have regulators around the world been doing in the last decade.

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