OPEC delegate sees oil drop to $90-$100 ideal

Energy Reuters

LONDON (Reuters) - The steep slide in oil prices this week is welcome because crude above $120 a barrel may hurt the world economy, while crude at $90 to $100 is ideal, an OPEC delegate said on Friday.

Continue Reading Below

Oil fell toward $109 a barrel on Friday, extending a record rout in the previous session, which wiped as much as 10 percent from the price, on concerns about the strength of global economic recovery.

"The price had been going too high, to $120 a barrel, which is not good for consumers because it can affect the world economy," said the delegate, who declined to be identified by name. "A price in the range of $90 to $100 will be ideal."

Oil's drop was prompted in part by the death of al Qaeda leader Osama bin Laden, the delegate said, rather than any change in supply and demand for oil.

The Organization of the Petroleum Exporting Countries is scheduled to meet on June 8 in Vienna and is likely to keep its formal output policy unchanged, despite the loss of Libyan supplies, the delegate said.

"I do not think we're prepared to change the quota at the moment due to the geopolitical uncertainty. Libya's production has dropped dramatically, but there has been a compensation by Saudi Arabia and other members."

Continue Reading Below

Even so, other members of OPEC see the need for a clear signal in June that the group is prepared to take action to bring oil back below $100 a barrel.

OPEC's Gulf members including Saudi Arabia tend to take a more moderate view on prices than relative hawks such as Iran, which holds the rotating OPEC presidency this year, and Venezuela.

"I think OPEC may consider raising production as a psychological factor that would help prices come down," a delegate from one of OPEC's Gulf countries said on Thursday.

(Reporting by Alex Lawler; Editing by Barbara Lewis and Jane Baird)

What do you think?

Click the button below to comment on this article.