Saudi Arabia said recently that it hopes to raise oil prices to $75 a barrel. They said that no measures would be taken until OPEC’s scheduled meeting in December taking place in Algeria. The Saudi oil minister said that OPEC will “do what needs to be done” to raise prices, stating that, “$75 is a fair price for oil.” Just last July; a barrel of crude oil was trading at its highest price of $147, now it is about $90 cheaper than that.
The justification for the price increase is to insure proper investment in the oil sector. If prices were to be increase somewhere between $70 to $80, then that would be a high enough price that would encourage development of new oil fields. If this doesn’t happen then it can lead to an oil crisis in the future due to the lack of investment.
For oil prices to increase to just $65, OPEC output would have to cut production by more than 3 million barrels a day, which is very unlikely.
1 comment:
At this rate in 75 years we won't be having conversations like these anymore...
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