Speaking to Shana, Amirmoini said various elements including lower demand, oversupply, selling forward contracts by speculators and rising oil production in the U.S and Libya are the main reasons behind the recent slide in oil prices.
“When the market is faced with falling demand and simultaneously rising supply, naturally some countries try to absorb customers by offering discounts”, he said adding even though Saudi Arabia’s move to cut official selling prices could by justified economically, the country’s move is unacceptable as an OPEC member.
According to the IIES advisor, being a member of OPEC means that they should act under their obligations.
He added that OPEC’s members are expected to ask Saudi Arabia to lower its oil production, otherwise oil prices may fall sharply.
“In 1998 inadequate reaction by OPEC sent oil prices to as low as 6 to 8 dollars per barrel”, Amirmoini said.
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