OPEC SEE LIGHT: $130 BLN DOWN
Global oil investments are set to be slashed by $130 billion this year, crimping supplies and ultimately boosting prices, the chief of the Organization of the Petroleum Exporting Countries said Tuesday at a conference here.
Speaking at a conference titled Oil & Money, OPEC Secretary-General Abdalla Salem el-Badri said global investments in petroleum projects will be reduced by 22.4% to $521 billion in 2015. Lower supply will result in "less supply in the very near future. Less supply means high prices," he said.
The remarks come as many member countries of OPEC have been running budget deficits because the organization has decided to maintain production ceilings in the face of falling oil prices, in an effort fight for market share against American shale-oil producers.
Also speaking at the conference, Fatih Birol, head of the International Energy Agency, which represents oil consumers, said he also expects expenditures to fall by 20% in 2015, "the highest drop in history."
Mr. el-Badri said the fall in the price of oil has given a boost to consumption and predicted that global demand would rise by 1.3 million barrels a day next year.
"We are not in disarray," Mr. el-Badri said. "We see some light at the end of the tunnel." He said he thinks oil markets will regain balance within 18 to 24 months.
OPEC has been waging a battle to keep market share against U.S. shale-oil production, which has proven relatively resilient despite lower oil prices. Mr. el-Badri said he was open to talks with the U.S., although the fragmented nature of North American production would make such dialogue a challenge.
"If the situation right now is a problem for all of us, including the U.S., let us talk," the OPEC chief said. But "200 people, it isn't possible," he said, referring to the number of U.S. shale-oil producers.
The cartel has already held regular consultations with non-OPEC members such as Russia, and Mr. el-Badri said he had invited experts from producers outside the group to debate the current market next month.
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