EU, OPEC worry as low oil prices crash investments
The European Union (EU) and the Organization of the Petroleum Exporting Countries (OPEC) were apparently unconfortable with the current trends of crude oil prices which has significantly crashed major investments in the sector.
Arising from twelfth energy dialogue in Vienna Austria recently, the dou confirmed that there has been a growing challenge in energy markets, particularly for oil since the last energy dialogue meeting in June 2014.
According to the delegations, oil prices have fallen by more than 70 per cent within the period, while many investments have been deferred or cancelled, manpower has been laid off, and the market has been searching for a supply-demand balance.
The EU delegation was headed by Miguel Arias Cañete, Commissioner for Climate Action & Energy at the European Commission. The OPEC delegation was led by Abdalla Salem El-Badri, Acting Secretary General of OPEC.
Looking ahead, both the EU and OPEC noted with concern that the current price environment has considerably reduced investments, adding that such a massive fall in investment could in time lead to a supply shortfall and the risk of a sharp oil price rebound, as has been witnessed in the past.
“Although producers and consumers might have different views on what is an adequate oil price level, there was broad agreement that excessive oil price volatility and/or sharp price rises would be harmful for the economies of both the producing and consuming countries. An affordable and stable oil price, alongside a balanced and stable market, is a prerequisite for economic growth for both producers and consumers,” the communique reads in part.
Both the EU and OPEC recognised that through the energy dialogue and through initiatives in other global fora and organisations, cooperation should be enhanced, as should understanding of the behaviour of energy and oil markets, something which is important to helping achieve future oil market stability.