ABU DHABI (Reuters) - OPEC will not cut its oil output to support prices but expects higher-cost producers to do so, the United Arab Emirates energy minister insisted on Tuesday as oil plunged near six-year lows.
While Suhail bin Mohammed al-Mazroui was speaking, Brent crude dropped 4 percent to below $46 a barrel following a 5 percent plunge on Monday, continuing a rout that has more than halved its value in the past six months.
Mazroui showed no sign of backing down from OPEC’s insistence that other producers - particularly the U.S. shale oil drillers which it blames for oversupplying the market -reduce their output.
“The strategy will not change...,” he told a Gulf Intelligence energy conference in Abu Dhabi.
By not reducing output, “we are telling the market and other producers that they need to be rational and like OPEC, they need to look at growth in the international market for oil and need to cater that additional production to that growth”.
The firm stance of Saudi Arabia, the UAE and other Gulf Arab producers in the Organization of the Petroleum Exporting Countries is causing dismay among some other oil exporters. As Mazroui spoke, Iranian President Hassan Rouhani said in Tehran that countries behind oil’s plunge would regret it.
“Those that have planned to decrease the prices against other countries, will regret this decision,” Rouhani said in a speech broadcast on state television.
“If Iran suffers from the drop in oil prices, know that other oil-producing countries such as Saudi Arabia and Kuwait will suffer more than Iran.”
Nicolas Maduro, president of fellow OPEC member Venezuela, visited Saudi Arabia and Qatar this week to plead for OPEC action to support oil prices and seek financial aid from Qatari banks.
But Mazroui said OPEC had no intention of changing its decision, reached at a meeting in November, to keep its production steady. He indicated there was little prospect for an emergency OPEC meeting to discuss policy before the group’s next scheduled conference this June.
“The market needs more time - it’s not rational to meet or do anything in this time,” he said. “Most probably we are going to wait until our meeting in June, and let’s not jump to conclusions.”
Pressed repeatedly to identify a fair price for oil and predict when it would stabilize, Mazroui said nobody could dictate the price and suggested the process might take years.
“History tells us whenever we try to predict what will happen we will get it wrong. What I would say is that it is unlikely we will see a sudden rise - it will take some time...
“It will all depend on what we see in this quarter and the next quarter. The first half of 2015 will give us more data to predict what will happen.”
But while criticizing shale producers, he acknowledged that the world needed them to continue operating, and said a fair price range would be one in which they acted as the market’s swing producers.
“I’m not going to give you a price but I would suggest something we all know, that the shale oil producers are very important for the market supply and we all need them to stay.
“So if that is the case, since they are producing almost 4 million (barrels per day) today, I think whatever price that makes shale oil continue to be produced is going to be the fair price for the conventional producers to produce, whether 60 or 70 or 80 (dollars) or whatever figure - that is where the market will stabilize.”
Additional reporting by Stanley Carvalho; Writing by Andrew Torchia; Editing by Dale Hudson