OPEC: World will pay for low oil prices by 2013

OPEC, the supplier of 40 percent of the world’s crude oil, said low prices may lead to a supply crunch by 2013 and rejected consumers’ arguments that cheap oil will help the world economy to recover.

“If the current low-price environment persists, this short- term relief may not translate into long-term gains,” OPEC Secretary Abdalla el-Badri said in an e-mailed statement today. “The failure of the industry to invest will result in a supply crunch by 2013 and beyond.”

Badri was responding to Nobuo Tanaka, the executive director of the International Energy Agency, who was cited in yesterday’s Financial Times as saying the global economy would get the equivalent of a $1 trillion stimulus if oil prices stayed at $40 a barrel this year. The IEA advises 28 oil importing nations on energy policy.

Crude oil for April delivery rose $1.47, or 3.4 percent, to $45.08 a barrel at 9:58 a.m. on the New York Mercantile Exchange. Prices are down 69 percent from the record $147.27 a barrel reached on July 11.

Badri cautioned against a move by the U.S. to seize on the low prices in order to increase in taxes on petroleum fuels. Such measures would increase the burden on consumers and may prompt oil-producing nations to reconsider investments to expand output capacity, he said.

Badri didn’t specify whether the 12-member OPEC is likely to decide to cut production at March 15 meeting in Vienna.

“It should be noted that the IEA’s own demand forecasts have been continually revised down in recent months,” he said, responding to Tanaka’s call for OPEC to monitor the market “carefully” before deciding to cut supply again.

The group agreed on Dec. 17 on output constraints that would reduce supplies in January by 2.2 million barrels a day from December levels. That followed pledges to remove 2 million barrels a day in the fourth quarter of last year.

The 11 members with quotas were producing at a rate of 25.39 million barrels a day in February, according to Bloomberg estimates. Their target is to produce 24.845 million barrels a day. Iraq is allowed to produce at will.

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