OPEC officials said on Monday the oil market was poised to start rebalancing itself after prices sank to their lowest since 2003, a sign the exporter group will stick to its policy of not cutting supplies without help from rival producers.
Oil prices have collapsed to below $28 a barrel this month from $100 in mid-2014 on a supply glut. The drop gained impetus after the Organization of the Petroleum Exporting Countries in late 2014 shifted strategy to defend market share, not prices.
The price drop has started to slow the development of relatively expensive supply sources such as U.S. shale oil and forced companies to delay or cancel billions of dollars worth of projects, putting some future supplies at risk.
“We expect that we will go through one more downturn cycle of oil price. But we will recover. The market is definitely going to balance itself because today’s oil price is not sustainable whatsoever,” Qatar’s Energy Minister Mohammed al-Sada told a conference in London.
Speaking at the same conference, OPEC Secretary-General Abdullah al-Badri said he also saw reason for optimism, citing forecasts for further growth in global oil demand in 2016 and a contraction in non-OPEC supply.
“We already see some signs that supply and demand fundamentals will start to correct themselves in 2016,” Badri said at the conference at Chatham House.