Minister warns oil price may drop to US$11 and 12 per barrel
Wednesday, December 20 2000 - 05:30 AM WIB
Minister of Energy and Mineral Resources Purnomo Yusgiantoro warned on Wednesday the oil price might drop to between US$11 and $12 per barrel by the end of next year, from $31 per barrel at the end of this year due to oversupply.
Purnomo said in a statement distributed during a yearend press conference that the world's oil demand was expected to increase by 1.5 barrels per day (bpd) to 77.4 bpd next year from 75.9 bpd this year.
Non-Organization of Petroleum Exporting Countries (OPEC) countries are expected to increase their output by 0.9 million bpd to 49.9 million bpd next year, while the remaining 27.4 million bpd oil supplies to the meet the global demand that year are expected to come from the OPEC member countries.
Purnomo noted however that the figures were still lower compared to the current supplies of OPEC, which stood at 29.3 million bpd.
"If OPEC does not cut its output, analysts say there will be an average oversupply of 2 million bpd in 2001. If the current production level is kept in place, the world's oil price is seen to drop by $5 per barrel each quarter to the level of $11-$12 by the end of next year,
"However, if OPEC cut its output to 27.5 million bpd starting from the first quarter of next year, the oil price is estimated at $21-$22 per barrel by the end of next year," Purnomo said.
Because of this, Purnomo said, OPEC had decided in its previous ministerial meeting that it would not up its output until the extraordinary meeting scheduled for Jan. 17, 2001. (Godang)