Opec should aim for $30 to $38 a barrel, says Al Hamili

By Dalal Abu Ghazaleh, Staff Reporter
Published: 00:00 December 15, 2004

Opec should aim for an oil price of $30 to $38 a barrel, the UAE's energy minister said yesterday.

"The fair price at present is between $30 and $38, if we take inflation and the depreciation of the dollar into consideration.
"This, in real terms, is equal to the [old price band] of $22 to $28," Mohammad Bin Dha'en Al Hamili, UAE Energy Minister, said at a news conference.

Al Hamili's Qatari counterpart, Abdullah Bin Hamad Al Attiyah, and Adnan Shihab Al Din, research director at the Vienna-based Opec, also participated in the news conference.

Al Hamili said a switch to a basket of currencies from the dollar, which is the only pricing unit for Opec, was still not under discussion by Opec, whose members are to meet in Vienna on January 30.

Al Din said Opec sees next year's demand increasing by at least 1.5 million barrels per day, from the current level of 82.5 million barrels per day.

Opec decided in Cairo on Friday to cut one million barrels a day of excess output.

Analysts are not sure the cut would be sufficient to restore market balance, especially during the second quarter, when demand drops by up to two million barrels a day after the end of winter.

Al Attiyah said the ministers, at their Vienna meeting, would chart what action the group would take in the second quarter to maintain the balance between supply and demand.

"However, we must wait and not rush into any decision," he said.

"We may cut one million barrels, maybe one thousand, maybe nothing. It all depends on the reaction of the market, and the supply and demand scenario."

Al Attiyah said the price was determined by market forces, and Opec's task was to balance the supply-demand situation.

"When oil prices rose, all consumers contacted us. We believe in serious dialogue between consumers and producers. We are concerned about the weakness of the dollar, and they are worried about higher prices," he said.

World oil prices hovered at about $41 a barrel yesterday, after falling 26 per cent from the record highs in October.
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