SINGAPORE, Oct 31 (Reuters) – Oil producers can tolerate a further fall in oil prices to $80-$100 a barrel, the oil minister for the United Arab Emirates said on Monday, the first indication of a preferred price range from a Gulf Arab producer since OPEC talks collapsed in June.
“For us it is very important to see a reasonable price…to us a price that is around $80-$100, that is reasonable,” said UAE Oil Minister Mohammed bin Dhaen al-Hamli.
“We need a reasonable price to continue building capacity,” Hamli told the Singapore International Energy Week conference.
The UAE is one of the trio of Gulf OPEC producers alongside leading producer Saudi Arabia and Kuwait which work closely together on output policy. The three control nearly all the world’s spare capacity and raised oil supplies this year to compensate for lost Libyan production.
Brent crude on Monday was valued at just over $109 a barrel, having fallen from about $118 when OPEC met in June, leaving plenty of room to fall further to get into the UAE’s preferred price range.
June OPEC talks broke down in acrimony when Gulf producers failed to convince the Organization of the Petroleum Exporting Countries to lift production.
Saudi, the UAE and Kuwait raised output unilaterally. They are the group’s most moderate on prices, keen to prevent energy costs restricting global economic and fuel demand growth.
Hamli said the UAE had not yet cut back on the production it added in June to cover for Libyan civil war losses and was still pumping 2.5 million bpd of its 2.7 million capacity.
“It’s still premature to say. We don’t know when Libyan production will be back,” Hamli said.
Libya pumped 1.6 million bpd at the start of the year and since the fall of Muammar Gaddafi has restored only a few hundred thousand barrels a day.
Hamli said it was too early to talk about any decision from OPEC at its next meeting in December.
He said a high oil price would lead to more investment in alternative energy and also more investment in crude production capacity, which would mean less volatile prices.
“The higher the capacity, the less fluctuation in prices, except that capacity that is not in used is very expensive.”
He said an oil pipeline to its Fujairah port from its oilfields that will allow UAE oil exports in part to bypass the Straits of Hormuz would be completed in “a few months.”