OPEC acting Secretary-general says $80 per barrel oil unlikely but possible

A March 3 Dow Jones Newswires report from Kuwait City quoted acting OPEC Secretary-general Adnan Shihab-Eldin as saying the possibility of oil prices rising to $80 a barrel over the next two years is highly unlikely, but that he couldn’t rule out the chances of such a steep spike.

The Dow Jones report credited a March 2 Kuwaiti daily Al-Qabas story.

Asked whether prices could rise to $80 per barrel, Shihab-Eldin said it was difficult to predict prices, as one would have to be aware of factors affecting supply and demand fundamentals, as well as political factors in the future.

The acting Secretary-general of OPEC, which meets in April to review output policy in Iran, said if prices were to rise because of an outage of supply from a country producing between 1 million and 2 million barrels per day the spike wouldn’t last long.

He said if prices rose to $50-$60 per barrel for two or more years, investment in other sources of supply and a reduction in demand would cause prices to drop, Dow Jones reported. It is in OPEC’s interest to prevent sharp changes in the price of oil, Shihab-Eldin said, noting that structural changes in the oil market caused prices to rise last year; the biggest was a surge in demand from Asia, especially China, which made up two-thirds of global oil demand. Reduced supply from non-OPEC producers also played its part, he said.