The plunge in oil prices in the wake of the euro crisis has OPEC worried.
Qatar oil minister Abdullah bin Hamad Al Attiyah emerged as an unofficial spokesman for the oil cartel over the weekend in a series of news agency reports from the Gulf that signaled the group’s concern.
On Monday, as oil futures briefly dipped below $70 a barrel after settling Friday at $71.71, Al Attiyah told reporters that a price below $70 a barrel was too low for companies to maintain investment and expand capacity. Such investment is crucial to avoid a supply shortage in the future, Al Attiyah said.
He reiterated that following the lead of Saudi King Abdullah’s pronouncement about a “fair” oil price in December, OPEC officials want to see a price between $70 and $80 a barrel.
At another industry event on Saturday, Al Attiyah told news agencies that the drop in oil prices was “psychological” and not based on fundamentals. He said the crisis concerning Greece and the euro was causing the drop and speculation about “contagion” would continue to depress oil prices.
“The whole world then started to ask the question about if it will move to other countries,” the Qatar minister said, according to agency reports. “We're watching, with nervousness.”
Qatar, one of the world’s leading producers of natural gas, is a relatively small oil producer, but is closely allied with the main Gulf producers – Saudi Arabia, Kuwait and United Arab Emirates.
Concern about the future of the joint European currency continued to batter financial and commodity markets on Monday, as prices fell and the euro declined further against the dollar and other currencies.
At a meeting of the Arab OPEC members earlier this month, Kuwaiti oil minister Ahmad Abdullah Al-Sabah said a price below $65 a barrel would “ring a bell” for the oil cartel and could prompt them to hold an emergency meeting ahead of the next scheduled meeting Oct. 14.
OPEC could react to a low price by cutting production, as it did in 2008 when the financial crisis lowered demand and sent oil prices plunging.
By. Darrell Delamaide