OPEC moots $80 as new 'fair' oil price - but will it stick?
By Alex Lawler, Rania El Gamal and Dmitry Zhdannikov
VIENNA (Reuters) - Nearly a year after oil markets entered a deep downward spiral, unmoored from the $100-a-barrel mark that had anchored them for years, some OPEC members are publicly talking for the first time about a new "fair" price for their crude.
Oil ministers from Iraq, Venezuela and Angola said in Vienna this week that a price of $75 or $80 a barrel - barely $10 above the going rate - could be just fine. Iraq's Adel Abdel Mahdi said it would be "equitable".
Privately, one Gulf OPEC delegate also told Reuters he reckons crude may be trading around this level next year, once markets rebalance.
It remains to be seen whether this new range becomes a common refrain for the group, which has effectively given up efforts to maintain prices in order to defend its share of the world market.
Importantly, Saudi Arabia - which for years had pointed to $100 a barrel as a "fair price for producers and consumers" - has given no indication that it subscribes to this view.
Yet simply by uttering the numbers, OPEC ministers are helping to quench a craving among traders, investors and energy executives for clarity on medium-term oil prices, an indication as to when months of uncertainty and volatility may end.
To be sure, there's no indication that the Organization of the Petroleum Exporting Countries as a whole feels any urgency to push prices back up into the $70s - in fact quite the opposite. The group is expected on Friday to agree to maintain its current production for months to come.
Even if Saudi Arabia and its Gulf allies begin talking seriously about shoring up the market, finding the right balance will be tricky: Iran needs more than $100 a barrel to balance its budget; yet too high a price threatens to revive competition from the U.S. shale industry, where urgent efforts to cut costs have already helped temper some of the downturn. Continued...