Baku, Azerbaijan, April 21
By Aygun Badalova - Trend:
Saudi Arabia seems to be willing to tolerate the pain cause by low oil prices now in the hope that prices are higher in the long-run, Jason Tuvey, Middle East Economist at British economic research and consulting company Capital Economics believes.
Saudi authorities are simply taking a longer-term view of the oil market, Tuvey said in a report, obtained by Trend.
Their fear, he believes, to be that a short-sighted deal to support oil prices could encourage further development of unconventional sources of oil, which would undermine the country's long-term position in the market.
It could also curtail demand for hydrocarbons and hasten a shift away from the use of fossil fuels, he said.
Secretary-General Abdallah El-Badri told reporters on the sidelines of the International oil summit in Paris, that he expects re-balancing of oil market by the end of 2016-early 2017, RIA Novosti reported earlier.
He said that the overproduction is the only problem now.
"If we solve this problem the market will be balanced," he said.
At the same time, the chief of the International Enrgy Agency (IEA) Fatih Birol said that low oil prices had cut investment by about 40 percent over the past two years, with sharp falls in the US, Canada, Latin America and Russia.
He expects the oil market to come back into balance from oversupply by next year.
"This year, we are expecting the biggest decline in non-OPEC oil supply in the last 25 years, almost 700,000 barrels per day. At the same time, global demand growth is in a hectic pace, led by India, China and other emerging countries," The Economic Times quoted Birol.