The secretary-general of OPEC on Sunday urged Gulf Arab nations to keep investing in oilfield development despite the plunge in crude prices and gave no indication the cartel was prepared to shift its strategy to halt the slide.
Oil prices have shed nearly half their value since late June, including a 4 percent tumble Friday that left benchmark U.S. oil prices at $57.81 a barrel, their lowest level since May of 2009, when the U.S. was still in recession.
Speaking at a forum in the Gulf commercial hub of Dubai, Abdullah al-Badri said continued investment by Gulf nations will help prevent a shortfall in oil supplies once demand picks back up.
Increased production by non-OPEC countries is adding to world supplies, but it is not enough to account for the steep decline over the past six months, al-Badri told reporters after speaking at the Arab Strategy Forum.
“We as an organization are assessing the situation to determine what the real reasons behind the decrease in oil prices are,” he said.
At its most recent meeting late last month, the 12-member OPEC decided to keep its output target unchanged. A cut might have helped lift prices, but it also could have hurt members’ market share in the face of rivals, which increasingly include the United States thanks to its oil-shale boom.
The OPEC chief said the United States, the world’s largest oil consumer, would still need to rely on overseas producers even as it ramps up domestic shale oil production.
OPEC has also struggled to maintain discipline among its own members, whose overproduction undermines any official target cut.
The organization has no target price, and took its most recent production decision with both member countries and consumers in mind, al-Badri said.
Al-Badri said OPEC would weather the latest downturn noting that “we’ve been through this several times before” but he urged member states to cut any wasteful spending at home in the meantime.