Speaking in Switzerland, OPEC’s Secretary General said he expects prices to rebound
Abdullah al-Badri, Secretary General of OPEC, expects oil prices will remain low for another month before rebounding, reports CNBC.
Speaking at the World Economic Forum (WEF) in Davos, Switzerland, al-Badri said that he was unsure of how far oil prices might fall before coming back up, but expressed confidence that prices would not remain low for much longer. “I really cannot tell you [how low prices will go,] but I’m sure prices will rebound.”
Standing by their decision
While at the WEF, al-Badri also defended OPEC’s decision not to cut production. “If we had cut in November we would have to cut again and again as non-OPEC would be increasing production,” said the secretary general. “Everyone tells us to cut. But I want to ask you, do we produce at higher costs or lower costs? Let’s produce the lower cost oil first and then produce the higher cost.”
Some members of OPEC continue to call on the cartel to cut production in order to bring prices back up. Venezuela in particular has been hurting from the low price of oil. With inflation growing to over 60%, Venezuela’s President Maduro has been visiting other countries in order to secure financing to keep the struggling economy afloat.
Despite the hard times some OPEC members are facing, al-Badri says the organization remains unified. “This is a collective decision. It is agreed by all the ministers,” he said. “We are more united than ever… We are a very strong group.”
Claudio Descalzi, head of Italian energy company Eni (ticker: E), said that the long-term effect of that decision could be costly, however. Descalzi said that unless OPEC starts trying to restore stability to the oil market, the cartel’s decision could lead to prices shooting over $200 per barrel a few years down the line, reports Reuters. “What we need is stability,” he said. “OPEC is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way.”
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