NEW DELHI: Global crude oil prices at seven-year lows will not continue and could swing upwards in as little as a year, OPEC Secretary-General Abdullah al-Badri said on Tuesday, as the low-price cycle leads to cuts in output from some producers.
Oil prices have fallen by about two-thirds since mid-2014, with Brent crude on Monday flirting with its lowest level since 2004 at just above $36 a barrel.
Most analysts, however, don't expect oil prices to regain the $100 mark until 2017 or later, arguing that producers will continue to pump out more crude than is being consumed.
"I've been in the oil business all my life. I saw six cycles - I saw very high price, I saw low price, and this is one of them. This will not continue," Badri said at the first OPEC-India Energy dialogue in New Delhi.
"In a few months or a year or so this will change," he said.
He said OPEC does not have a target price but was looking for a fair value that meant "member countries can have a decent income and also where we can invest to (provide) more supply to the consumers".
The world is already producing up to 2 million bpd more oil than it consumes, with OPEC pumping at near-record levels in an attempt to drive higher-cost producers such as U.S. shale oil drillers out of the market. And its strategy appears to some extent to be working.
Non-OPEC annual supply growth shrank to below 300,000 bpd in November from 2.2 million bpd at the start of the year, according to the International Energy Agency (IEA).
Oil output could decline in the next two to three years as low prices have resulted in a planned $130 billion in investment being cut this year, Badri said, adding that non-OPEC supplies are set to decline by about 400,000 bpd next year.
The Organization of the Petroleum Exporting Countries (OPEC)in its Dec. 4 meeting failed to agree on an output ceiling, raising the stakes in a battle for market share that began at the end of 2014 against the wishes of some members with fragile economies, such as Venezuela, Nigeria and Ecuador.
Another big supplier Iran has been clear that it aims to raise its output by at least 1 million barrels per day (bpd) - about one percent of global supply - after sanctions against it are lifted next year.
OPEC is determined to keep pumping oil vigorously despite the financial strain even on the policy's chief architect, Saudi Arabia, alarming weaker members of the cartel who fear prices may slump towards $20 a barrel.
But Badri said even if the United States government begins to allow more exports of crude, prices will not be weakened further and OPEC can continue to produce at current rates.