Oil Prices Have Hit Bottom, OPEC Chief Says

OPEC Secretary General Subroto said today that oil prices have hit bottom and he ruled out emergency OPEC talks to prevent any further declines.

Subroto said the OPEC reference basket of seven crudes averaged $14.24 a barrel in the first week of June. The target price of the Organization of Petroleum Exporting Countries for this basket is $18.

“We feel $14.24 is more or less the bottom already,” he told an oil conference in Singapore by telephone from OPEC headquarters in Vienna. “From now we will see a strengthening of prices instead of further weakening.”

“We are not going to have a special meeting or an emergency meeting,” he said.

At emergency talks in May, OPEC ministers agreed to reduce production by just over 1.4 million barrels a day to try to reverse the sharp drop in oil prices this year.

Prices have fallen again since then due to reports of continued high OPEC output. The Middle East benchmark crude, Dubai, fell $1 last week to $13.20 a barrel for July.

“The decision we took in May will be executed more in June, and production will go down,” Subroto told the conference.

Subroto had been due to address the Oil and Money Conference in person but canceled his trip because of the oil price crisis, organizers said.

In a paper presented on his behalf, Subroto said prices are bound to improve. But “a real and lasting improvement can be reached only if the fundamentals of the market strengthen,” he said.