The head of the International Energy Agency (IEA) warned that the targeted oil price level of the Organization of the Petroleum Exporting Countries (OPEC) of around $70 per barrel will hit the poorest countries the hardest.
"The market is clearly aware that OPEC has set a new implicit target price or price range of around $70 per barrel, which this cartel will strive to defend by all means," said Claude Mandil in an interview with Arab Oil and Gas. "I regret this, as it is a factor that has the potential to pressure global economic growth and represents an extremely heavy burden for the poorest people and the poorest countries," he stated.
He estimates that oil supplies should continue to grow, parallel to consumption growth of about two percent annually. OPEC has accurately assessed that the oil market is well supplied, but what concerns us most is what the market situation will be tomorrow, or at the end of 2007, Mandil further emphasized. "More oil is needed, but unfortunately, signals from OPEC do not leave us with much hope in this regard," he added.
The next meeting of this oil cartel is scheduled for September 11 in Vienna. Mandil assesses that an announcement of increased production is not to be expected, noting that there are no indications that there could be discreet increases from some OPEC producers. He dismissed the potential seriousness of the recent crisis in the U.S. subprime mortgage market on energy and oil consumption, stating that their duration is currently only at the level of assumption.
"If producer countries are indeed so concerned about the effects of this crisis on global economic growth, the right solution would be to try to lower oil prices to neutralize potential deflationary effects on the economy," he said. (Hina)
