US$70 per barrel is ideal price for oil to sustain investments in fields and avoid shortages

20-Jan-09

If investments in fields are to be sustained and shortages avoided, it is necessary for oil prices to hover around US$70 a barrel as per Venezuelan Energy and Oil Minister. Oil-exporting nations have been faced with drastic drop in revenue due to a 10% plunge in crude oil values in the past six months. OPEC's current priority seems to be market stabilization, and to avoid a cycle of disinvestment in projects. As demand continues to deteriorate and an oversupply of oil is evident amid a global economic meltdown, the only option for OPEC to control prices will be production cuts. OPEC trimmed 2.46 mln bpd from production quotas at a Dec. 17 meeting, and got into effect a 9% production cut on Jan. 1, the effects of which are expected to be experienced at the end of the month. OPEC members are mulling a further 2 mln bpd production cut.