Following the positive development in the global oil market where oil prices took a healthy surge, Saudi Arabia’s Energy Minister,Khalid al-Falih has predicted that the price of crude oil might hit $60 per barrel this year.
This is coming as the Russian President, Vladimir Putin, on Monday threw his weight behind the decision of the Organisation of Petroleum Exporting Countries, OPEC, to cut global production in order to boost prices.
Falih said he was optimistic major oil producers could agree to cut production by November and that it wasn’t “unthinkable” that crude prices could rise another 20 per cent this year to $60 a barrel.
The Wall Street Journal reported that the minister’s words confirmed a decisive shift in policy by OPEC towards a return to market intervention.
OPEC, the 14-nation cartel that controls over a third of the world’s oil, agreed on September 28 to a modest production cut, aiming to curb its current record high output to between 32.5 million barrels a day and 33 million barrels a day—a reduction of roughly one to two per cent.
A production cut is meant to reorder the supply and demand landscape and push prices up during a historic market slump.
Falih is joining an effort to get non-OPEC members to participate in output cuts, including Russia, which produces more crude oil than any other country.