Iraq Oil Minister: 'Crude Prices 'Reasonable'
Source: Associated Press, Rebecca Santana (6/1/10)
"world crude prices 'reasonable'. . .high enough to encourage oil investment."
Hussain al-Shahristani's remarks in an AP interview added to perceptions that OPEC is not eyeing any immediate changes in output despite the past weeks' large price swings.
The 12-nation group has left its output targets unchanged for about a year-and-a-half, fearing that any sharp revisions could undermine slow gains as the world struggles to emerge from its worst recession in over six decades. It is scheduled to meet next in October.
Al-Shahristani said there has been "good progress" in the economic recovery and oil prices are not impairing that process.
"On the one hand it (oil price) is sufficiently high to encourage investment, to develop marginal fields, mostly outside of OPEC countries," al-Shahristani said. He stressed that it was important that there be "production from other regions and areas, to reduce total dependency on OPEC output."
"On the other hand it is not too high to adversely affect the recovery of the world economy," he said. "I think we are at the right balancing point."
The benchmark crude oil futures contract for July delivery was trading near $72 a barrel in late trading in Europe. That is within range of what OPEC kingpin Saudi Arabia and others in the producer bloc say is a reasonable price for producers and consumers.
Prices have fallen from $87 per barrel in the span of weeks on worries that Greece's debt crisis could spread to other European countries, undercutting the economic recovery.
The drop in prices, however, carries serious implications for Iraq, which sits atop the world's third largest proven reserves of conventional crude oil.