ECONOMY

Oil prices seen to plummet

Oil prices, already on the slide since mid-March following the start of the war in Iraq, could fall sharply in the second half of the year, paving the way for the global economy to get back on track, Development Minister Akis Tsochadzopoulos predicted yesterday. Addressing an industry conference on energy in Athens, Tsochadzopoulos said the strong price fluctuations seen in recent months should stop as the war comes to an end and Iraq resumes production. «I believe in the second half of the year and at the start of next year, we should see a sharp decline in the oil price as the new Iraqi regime starts the oil flowing again,» he said. Oil prices soared from mid-November to mid-March in the runup to the war in Iraq. Since the conflict started, prices have fallen by about 23 percent. Prices dipped yesterday, despite signs that OPEC could reduce its output to prevent oversupply. The oil cartel is meeting on April 24 to consider a production cut. OPEC could seek to keep oil prices between $22 and $27 a barrel judging from the expected expenditures and income of Saudi Arabia, the largest oil producing country in the world, said Leo Drollas, deputy director and chief economist of the London-based Center for Global Energy Studies. He said, based on Saudi Arabia’s output of 8 million barrels a day, the minimum OPEC basket price required to cover planned current expenditure, less non-oil income, is $20.5 a barrel. «To cover planned current and capital expenditure, the required price is $24.3 a barrel. To also cover $2 billion of debt retirement needs $25.3 a barrel,» Drollas said. To cover Saudi Arabia’s expected current and capital expenditure, he estimated a range of $22.1 to $27.