OPEC Head Predicts Price Drop

Oil prices are still abnormally high, and members of the Organization of Petroleum Exporting Countries should not cut supplies if they continue to fall as the oil market is now in balance, Chakib Khelil, the president of the organization, said Tuesday.

Khelil, who is also the Algerian oil minister, said oil prices could fall to $80 a barrel or below in the long term, if the U.S. dollar continued to strengthen and geopolitical anxieties eased.

“The price today is abnormal at $123 a barrel,” said Khelil, speaking to reporters on a visit to Jakarta to meet the Indonesian energy minister.

He did not elaborate, but the ministers of the OEPC members have said repeatedly that they believe the surge in oil prices is not being driven by a shortage of supply.

The price of crude oil has slipped more than $20 from a record high above $147 a barrel earlier this month, but it is still up 30 percent on the year.

Asked if OPEC members should cut supply if oil prices continue to decline, Khelil said: “No, I don’t think so. Why should they cut production? They always want to make sure there is good supply and demand and to satisfy the demand.”

Khelil said he did not see any signs of demand destruction from high prices. “I think there is a good supply; there is a balance in the market.”

Asked if there was an option to cut production at OPEC’s September meeting, he said: “It is up to the conference in light of the market at that time. The market changes so much.”

Indonesia is the only OPEC member in the Asia-Pacific region, but it has seen oil production slump since the 1990s.

It said in May said that it planned to quit the cartel because it was unhappy with high oil prices after becoming a net importer.

“Indonesia plays a very important role, you know, in OPEC, and we would like it to continue playing that important role,” Khelil told reporters after meeting President Susilo Bambang Yudhoyono at the palace in the capital. “But it is a sovereign decision.”

Originally published by Reuters.

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