DUBAI (Dow Jones Newswires), September 18, 2008
Middle East oil producers will shelve projects to boost output if crude prices drop below $80 a barrel, a senior official from the Organization of Arab Petroleum Exporting Countries, or Oapec, told Dow Jones Newswires.
Abbas Naki, the Secretary General of Oapec, said that if oil prices fall further "we will see investments and developments in the oil sector in these countries decrease drastically."
Middle East oil producers have come under repeated attack for not investing enough in boosting production capacity, which they say has helped push prices to new records.
"On the long run, this will have a very bad effect on global markets," Naki said.
The Oapec includes countries that are already members of the Organization of Petroleum Exporting Countries, or Opec, such as Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Iraq, Algeria and Libya. The rest of its members are Egypt, Syria, Tunis and Bahrain.
According to Naki, Opec's basket price has fallen by about 30% since July, when it touched an all time high of $138.3 a barrel.
"This huge slide will definitely affect development projects in Arab oil producing countries. There is an uncertainty right now, and this uncertainty is delaying the execution of some projects," he said.
Oil prices dropped under $100 a barrel earlier this week and touched $89 a barrel on Tuesday before rebounding as investors ran for cover amid the collapse of Lehman Brothers Holding Inc (LEH) and the U.S. government rescue of American International Group Inc. (AIG).
Crude oil futures traded $2 higher in London Thursday, with the front-month October contract on the New York Mercantile Exchange trading $1.94 higher at $99.09 a barrel.
Copyright (c) 2008 Dow Jones & Company, Inc.