OPEC Members Say $80 Is “Fair”; Saudi Arabia Silent

With international oil markets still mired in a downturn due to the sharp decline in crude prices, some members of the Organization of the Petroleum Exporting Countries (OPEC) are now openly calling for a new “fair” price for oil. In Vienna this week, oil ministers from Angola, Venezuela and Iraq said that a price range of $75 to $80 per barrel was acceptable. This is hardly $10 above the current price of oil. A Gulf OPEC delegate said that the price of crude would probably reach this level in 2016 as markets stabilize, Reuters reports.

While speaking at an OPEC seminar, Iraqi oil minister Abdel Mahdi said that the oil price range of $75 to $80 was “equitable.” His view was seconded by the oil minister from Venezuela, Asdrubal Chavez. The statement by Chavez however came as a surprise as Venezuela is considered to be among the cartel’s price hawks. The president of Venezuela Nicolas Maduro said only three weeks ago that it was “in the best interests of Venezuela and OPEC to see the price stabilize at $100 in the medium term,” Reuters reports.

But by talking about possible crude prices in public, OPEC ministers are providing at least some clarity to energy executives, investors and traders regarding oil prices in the medium-term. With Saudi Arabia having shown no sign of backing this view which is shared by some other members of the oil cartel, it remains to be seen whether it will turn into a collective appeal by the group as a whole.

The oil-rich kingdom has long been advocating $100 per barrel as a fair price for both producers and consumers. Just last year in May, the Saudi oil minister Ali al-Naimi had said that “One hundred dollars is a fair price for everybody – consumers, producers, oil companies”, Reuters reports.

At the upcoming OPEC meeting in Vienna on Friday the world’s oil cartel is likely to leave crude oil production unchanged. That is a sign of how the cartel’s influence to weigh in on oil prices has reduced over time as the global energy market goes through changes. The group as a whole has given no hint that it plans to drive oil prices into the $70’s.

West Texas Intermediate (WTI) crude oil futures are currently trading at $59.64 per barrel, while Brent crude oil futures are trading at $63.80 per barrel.

The United States Brent Oil Fund LP (NYSEARCA:BNO), which tracks the movement in Brent oil prices, fell 2.58% yesterday to close at $22.99. The United States Oil Fund LP (ETF) (NYSEARCA:USO), which trades the movement in WTI oil prices, fell 2.47% yesterday to close at $20.17.

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