Brent oil, the global benchmark, declined almost 50% in the past year as Saudi Arabia and others in the Organisation of Petroleum Exporting Countries committed to maintaining output amid a global surplus

Bloomberg/Riyadh


Oil prices won’t rebound to $100 a barrel because increased prices would draw more shale and other output from higher-cost producers to the market, said Mohammed al-Madi, Saudi Arabia’s governor to Opec.
“I think it will be difficult to reach $100 or $120 another time,” al-Madi said at a conference in Riyadh yesterday. “This will let the high-cost producers come back again.”
Saudi Arabia, the nation leading Opec in defending its share of the global oil market, will keep investing to maintain its current output capacity, he said.
Brent oil, the global benchmark, declined almost 50% in the past year as Saudi Arabia and others in the Organisation of Petroleum Exporting Countries committed to maintain output amid a global surplus. US output is the highest in three decades as drillers pump crude from shale.
“Shale oil companies are one of the high-cost producers that benefited from high oil prices,” al-Madi said. “We’re not against shale oil. We welcomed shale oil but it’s not fair for high-cost producers to push low-cost producers out of the market.”
The world needs $40tn of oil investments in the next two decades to meet growing demand led by emerging nations, al-Madi said. Demand will grow 1mn bpd every year for the next 15 years to about 111mn bpd, Nasser al-Dossary, Saudi Arabia’s Opec national representative, said at the same conference yesterday.
Saudi Arabia produced 9.85mn barrels of crude a day in February, the most since September 2013, according to data compiled by Bloomberg. US output reached 9.42mn bpd this month, the highest rate in weekly Energy Information Administration data going back to 1983. Brent crude climbed 1.6% on Friday to $55.32 a barrel, down from $115.71 a barrel in June 2014.
“If producers don’t keep investing now, we will have problems in 20 years,” al-Madi said.
Saudi Arabia holds a “big role” to keep unity within the Opec, which supplies about 40% of the world’s oil, al-Madi said. In the past 55 years, Opec and non-Opec producers co-operated on production cuts 19 times. Russia, which isn’t part of Opec, didn’t always follow through when cuts were promised, he said.