[ 2014-12-15 ]

Opec willing to push oil price to $40 says Gulf oil minister
Senior Opec ministers says cartel has no fear of
oil prices falling to levels as low as $40 per
barrel amid price war with Russia and US shale

London (UK) – 15 Dec 2014 – The Telegraph -
Opec's most influential producers are willing to
allow oil prices to fall to $40 per barrel before
discussing whether the cartel should hold an
emergency meeting to discuss cutting output.

According to Suhail al-Mazrouei, energy minister
of the United Arab Emirates and a high profile
delegate of the cartel: "We are not going to
change our minds because the prices went to $60,
or to $40."

The official's comments made to Bloomberg News at
a conference in Dubai could add to further
downward pressure on prices, which have already
fallen more than 45pc since June. Brent crude - a
global benchmark comprised of high-quality oil
from 15 North Sea fields - closed last week at a
new five-and-a-half-year low under $62 per
barrel.

A slump in prices to levels around $40 per barrel
would be a boost for parts of the UK economy and
could see petrol prices drop close to £1 per
litre providing relief to motorists. However, the
slump will also threaten thousands of jobs in
Britain's petroleum industry and according to Wood
Mackenzie place around £55bn worth of oil
projects in the North Sea and Europe at risk of
cancellation.

The Organisation of Petroleum Exporting Countries
(Opec) - which is comprised of 12 members mainly
drawn from the Middle East - agreed at its last
meeting in late November to keep its production
quota unchanged at 30m barrels per day (bpd), a
move that has led to a rout on global oil markets.
Many analysts believe that Opec has effectively
launched a price war aimed at producers outside
the cartel such as the US and Russia.

Former Opec president and adviser to the Emir of
Qatar, Abdullah bin Hamad al-Attiyah told the
Telegraph last week that the group was now
"powerless" to halt the current fall in oil prices
without the cooperation of other world producers
such as Russia, Norway and Mexico.

The decline in prices also coincides with cooling
demand for crude and a global oversupply, which Mr
al-Attiyah estimates to be in the region of 2m
bpd.

Last week, the world's three leading energy
bodies, including Opec cut the forecasts for
demand growth into 2015.

According to the Paris-based International Energy
Agency (IEA), growth in world demand for oil will
next year again fall below the critical figure of
1m barrels per day (bpd), reaching 93.3m bpd in
total. The agency has also warned of a 300m barrel
increase that has built up in the storage tanks
across Europe and North America.

American estimates for demand are even more
depressed, with the Energy Information
Administration (EIA) — part of the US Department
of Energy — last week reducing its forecast
demand growth to just 880,000 bpd, or 92.8m bpd in
total. Finally, Opec itself shaved off 70,000 bpd
to 92.26m bpd, of which it will account for a
smaller share.

Source - The Telegraph

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