OPEC nations can withstand a drop in crude prices to the lowest in more than five years, while shale drillers will probably be the first to curb production amid the collapse, the United Arab Emirates’ energy minister said.
Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, amid a supply surplus that the U.A.E. and Qatar estimate at 2 million barrels a day. The Organization of Petroleum Exporting Countries is battling a U.S. shale boom by resisting production cuts and signaling its readiness to let prices fall to a level that slows American output, which has surged to a three-decade high.
“Everyone needs to take measures, but those who are producing the most expensive oil — the rationale and the rules of the market say that they should be the first to pull or reduce their production,” Suhail Al Mazrouei, the U.A.E. minister, told reporters today in Abu Dhabi. “If the price is right for them to produce, then fine, let them produce. If the price is not right, then they will reduce.”
U.S. crude slid below $45 a barrel today, falling to the lowest level since March 2009. Goldman Sachs Group Inc. (GS) and Societe Generale SA (GLE) cut their price forecasts, while Venezuela called on its fellow producers in OPEC to work together to lift prices back toward $100 a barrel.