LONDON (Reuters) – There is no need to panic at the recent collapse in oil prices, the secretary general of Opec said on Wednesday, saying low prices would curb competing supplies and require the group to pump far more by the end of the decade.
Abdullah al-Badri did not say whether Opec needed to cut oil production at its next meeting in November, something he has called for previously, and said prices should be set by the market.
Opec members have previously said they wanted oil at around $100 a barrel.
“We do not see much change in the fundamentals. Demand is still growing, supply is also growing. Opec is reviewing the situation,” Badri said in London, where he was attending the Oil & Money conference, an annual industry event.
“The most important thing is we should not panic,” he said.
“Unfortunately, everybody is panicking. We really need to sit, and think and see how this will develop.”
The price of benchmark North Sea Brent crude has dropped more than a quarter from a high above $115 per barrel in June as abundant supplies of high-quality oil have overwhelmed demand in many markets, filling stocks worldwide.
Brent was trading around $86.80 a barrel by 1030 GMT on Wednesday after reaching a low of $82.60 two weeks ago.
The Organisation of the Petroleum Exporting Countries, which pumps around a third of the world’s oil, meets on Nov 27 in Vienna. The oil-price drop has raised the question of whether the 12-member group will cut its output to support the market.
Badri said last month that he expected the group to lower its oil output target when it meets in Vienna, which would be its first formal output cut since the 2008 financial crisis.
Opec now has a production target of 30 million barrels per day (bpd) and Badri suggested last month that this should be cut to around 29.5 million bpd.
Badri said on Wednesday that the cartel did not have a price target but would instead leave that to the market.
“Opec’s average price will still be $100 at the end of this year so we are fine for 2014,” he said. “The fundamentals do not reflect this low price.”
“OPEC does not have a price target. We must let the market settle down.”
Badri said Opec had to be ready to pump far more in future.
“In the longer term, Opec must be ready to produce. Around 2018-2020, US tight oil will slow down,” he said.
“By 2020, Opec must be ready to produce 40 million bpd of oil, and 50 million bpd of liquids, that’s crude and natural gas liquids.”