The oil price will continue to decline and all OPEC countries will lose, unless they stop defending their individual shares in the global market and agree on cutting production, World Bank oil and energy consultant Mamdouh Salameh told RT.

RT: The Iranian president has implied that OPEC producers are tanking the prices on purpose. Do you agree?

Mamdouh Salameh: Well, Iran has been mostly affected by the decline of the oil price, the steep decline, and also by the sanctions, because they have forced Iran to reduce its oil exports. So there is a double blow to them.

Iran, as well as other Gulf producers, depend on a price of at least $100 to balance their budgets. Iran needs a higher price – $125. However, there is one difference. Because of the sanctions, Iran was able to diversify some of its resources.

In other words, the oil share in Iran’s economy is far lower than that in Saudi Arabia, Kuwait, and other Gulf producers. That is why in the long term, if the price remains very low, all of them will lose – particularly Saudi Arabia, Kuwait, and to some extent other Arab producers.

RT: At the moment, OPEC insists the market should find its natural place, so it won’t cut production. When – or should we say at what price – will they rethink that decision?

MS: As you have seen, the price of oil continues to decline, and in my opinion it will continue to decline. It could reach $40 a barrel as long as OPEC insists on not cutting its production. They have to call an urgent meeting and cut their production by a minimum of two million barrels very shortly to absorb the glut in the market. Otherwise all of them will be losers. If every producer tries to defend its share of the market, all of them will enhance the glut and increase it.

RT: Some experts say that the previous price of $100 dollars was abnormal. Do you think we’ll ever see the market bounce back to those levels?

MS: I think the sustainable price should be between $100-110. This is the price the producers can live with, and they can invest and get a good return and expand their production capacity.

The global economy can also benefit from such a price in terms of global investments in all economic aspects of the global economy, including oil and energy. The oil industry will also benefit, and I think all the economies of oil producers [will benefit], whether they are inside OPEC or outside OPEC. So the price has to be between $100-110, as a reasonable price.

Courtesy of RT