JAKARTA (Reuters) – OPEC should not consider cutting production after oil’s steep two-week decline as markets are now balanced, OPEC President Chakib Khelil said on Tuesday, adding that prices could yet fall another $50 a barrel.
Khelil, who is also Algeria’s oil minister, said oil prices could fall to $70 to $80 in the long-term, if the U.S. dollar continued to strengthen and geopolitical anxieties eased.
“The price today is abnormal at $123 a barrel,” said Khelil, speaking to reporters on a visit to Jakarta to meet Indonesia’s energy minister.
He did not elaborate, but OPEC ministers have said repeatedly that they believe the surge in oil prices is not being driven by a shortage of supply.
Asked if OPEC members should cut supply if oil prices continue to decline, he said: “No, I don’t think so, why should they cut production? They always want to make sure there is good supply and demand and to satisfy the demand.”
U.S. oil prices have fallen by $22 from a record high above $147 a barrel earlier this month amid growing concerns that high prices and slowing economic growth are causing a decline in demand, but prices are still up 30 percent on the year.
“We are not worried about any price, because we don’t decide the price. We just meet the demand,” he said.
Khelil said he did not see any signs of demand destruction from high prices.
“I think there is a good supply, there is a balance in the market.”
Asked if there was an option to cut production at OPEC’s September meeting, he said: “It is up to the conference in light of the market at that time. The market changes so much.”
Khelil said later on Tuesday after giving a lecture to energy officials that recent price moves did not reflect supply issues.
“And I think it is obvious to you that in the last week for example, you could not expect the price to come down by $25 because of a lack of supply or oversupply in one day,” he said.
Khelil also said that biofuel mandates in Europe and the United States had aided the run-up in prices.
“I strongly believe bioethanol, because it’s very expensive, it had an effect on the price per barrel of products,” he said.
Indonesia is Asia-Pacific’s only OPEC member but it has seen oil production slump since the 1990s and said in May that it planned to quit the cartel because it was unhappy with high oil prices after becoming a net importer.
Energy Minister Purnomo Yusgiantoro said that Indonesia had not yet officially submitted documents to withdraw from OPEC, but said the country’s interests were no longer in line with the cartel.
“President (Yudhoyono) has explained that we are a net oil importer. That means there is a difference in objectives from OPEC as producer countries,” said Yusgiantoro.