OPEC chief says that oil at $100 a barrel not harmful to global economy

Austrian newspaper Kurier reported in an interview with OPEC Secretary-General that an oil price of “$100 a barrel does not hurt the world economy.”

Abdalla el-Badri set out OPEC’s thoughts on oil prices and the political instability surrounding Iran in the interview published on January 20, as concerns rise that the fear of confrontation over the Iranian nuclear issue could take hold of oil markets.

The OPEC Secretary-General’s thoughts are in line with the recent announcement from the Saudi oil minister, Ali Naimi, who told CNN, “Our wish and hope is we can stabilize this oil price and keep it at a level around $100,” up from the “fair price” King Abdullah announced in November 2008 of $75 a barrel.

On the possibility of Iran closing the Strait of Hormuz, el-Badri said, “What we need in this oil-rich region is stability, not conflict.” In a plea to maintain peace, el-Badri added, “My advice is not to close the Strait of Hormuz. That would only lead to further problems that could escalate.”

According to The Financial Times, although the front of the oil curve has been consistently trading at approximately $110 per barrel, 10 percent more than OPEC’s preferred rate, forward prices, such as five-year forward oil Brent futures contract, have traded at $100 a barrel steadily since August.

El-Badri disagreed with a recent statement by Fatih Birol, chief analyst at the International Energy Agency, that the current price of oil is in a “danger zone” for the global economy, saying “this level is acceptable to both sides, for the producer as well as for the consumer countries.”