OPEC secretary General Abdullah Al-Badri said Sunday that oil prices have declined beyond the power of market fundamentals.
Al-Badri also said that the decision to keep output unchanged in the November meeting was not directed at anyone.
"The fundamentals should not lead to this dramatic reduction (in price). Some people say this decision was directed at the United States and shale oil. All of this is incorrect. Some also say it was directed at Iran and Russia. This also is incorrect,” Al-Badri said at a Dubai event.
Al-Badri’s comments indicate that OPEC saw market demand for crude oil was stronger, but the higher oil production is kept at a time when most developed economies are suffering from slowdown.
Maybe OPEC’s decision was not aimed at Russia, the U.S. or Iran, but it is most likely a decision for future market share, as the cartel was losing its control over the oil market.
In the next two to three years, U.S. shale oil and Canadian tar sands production could reach a near halt due to higher production costs, and then OPEC will again dictate the market with its own designated oil price.
Oil prices are trading at 5-year lows and the price floor is still not in sight with $50 a barrel now seemingly close.