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The Organisation of Petroleum Exporting Countries (OPEC) does not expect the low crude oil prices to continue beyond a year.
Speaking at the India-OPEC Dialogue on Tuesday, OPEC’s Secretary General Abdalla Salem El-Badri said, “I have seen several oil price cycles and this is one of them. The low prices will not continue. In a few months to a year this will change.”
Brent crude oil prices have neared 11-year lows and were trading at $38 per barrel on Tuesday.
“Right now investment in exploration and production has reduced by $130 billion. This means there will be no more supply coming in the years to come. If there is no more supply, there will be less supply to the market which would mean higher prices,” he added.
While El-Badri reiterated that OPEC will not cut production as the member countries can continue to produce at the current prices, he said that the low prices will result in supplies from non-OPEC countries coming down by 400,000 barrels a day in 2016.
US plan El-Badri also said that the US’ plans to export oil will not affect the market as it also imports a large amount.
On the production which will be added from Iran, he just said that the country has great potential but time will tell how much additional supplies come in.
This was the first India-OPEC Dialogue annual meeting. India and OPEC decided to hold such meetings annually in India and in Vienna, Austria every alternate year. OPEC holds such meetings with key consumers such as the European Union, China, Russia and other countries.
Discount price Asked whether India has managed to negotiate a discount for crude oil supplies, Dharmendra Pradhan, Minister of State (Independent Charge) Petroleum & Natural Gas, said, “Discounts, if we are getting, is not to be shared in the public domain. But certain things have been re-negotiated. India is emerging as an important market. We need a reasonable price and OPEC is co-operating. The very fact that they have not cut production says so many things.”
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