The international expert community keeps on pondering on the question of what is the fair oil price to date. In Qatar, the local government and numerous experts assume that this is $65 per barrel or higher. They say that only at this level the international industry will be able to sustain itself over the long term through further oil production and development of new oil fields, which requires considerable investments in the near future.
This idea was backed by the local minister of energy. In the near future, OPEC is going to arrange another oil summit to talk about their future. To be more specific, even though oil prices are recovering and already over $45/b for the first time this year, Qatar is still convinced that this is an unfair price and the market of crude oil is underpriced. They say that the oil market crash that started in 2014, has ben threatening the international oil sector ever since. Luckily, the prices are recovery slowly but surely, which creates some space for more positive expectations. In order to attract decent investments in the oil sector, the price have to recover at least up to $65/b. Since he is the current President of OPEC, he also commented on the situation from the stand point of OPEC. In particular, he doesn’t deny the possibility of going back to discussing oil production cuts to freeze them at January’s levels.
As you probably know, earlier in April 2016, OPEC, Russia and some other major oil market players visited n emergency summit in Qatar to discuss the situation and agree on production cuts. However, the the summit failed mainly due to Iran and Saudi Arabia. The thing is that Iran ignored the summit, which Saudi Arabia changed their mind at the last minute, claiming that every oil market player out there should do the same otherwise there is no chance for any agreement.
For now, the market is recovering. That said, we may well see the expected $65/b in the near future. But this remains to be seen…
