Bahrain Crown Prince wants oil at $70-$80 a barrel
LONDON, Feb 23 (Reuters) - The price of oil is too low, which will encourage a higher spike when the global economy rebounds, the Crown Prince of Bahrain said on Monday.
His Highness Shaikh Salman Bin Hamad Bin Isa Al-Khalifa said a reasonable price would be between $70 and $80. Currently, oil is about $38 a barrel, down from record levels of $147 a barrel last July.
"Largely driven by global demand, we think that the reasonable price for oil is somewhere in the region of $70 to $80," he told Jeff Randall Live on Sky television.
"At that price producers, small and medium-sized producers, can continue producing, and fields which are needed in a growing economy to be online can actually supply the world."
He warned that failure to reach that price would result in oilfields being shut down and capacity not being ready when the economy recovers.
"At $40 I think we have got an awful lot of people hedging right now to prevent the price dropping any lower because they would frankly just have to shut down.
"And the more difficult fields that are around the globe today would also have to be mothballed.
"Now what that means is that if we do enter an expansionary period in two years, a year and a half, three years, however long it takes, those fields need to be online.
"So unfortunately, with this low price of oil what we are actually encouraging is a higher spike in the future if, if, the global economy rebounds."
The Organisation of the Petroleum Exporting Countries has agreed to slash output in an effort to halt the sliding prices as world oil demand wanes during the economic downturn.
One of its neighbours, Dubai has suffered from a real estate slump that has led to thousands of job cuts, hundreds of billions of dollars in project cancellations and raised concerns about bank asset quality.
This week, it sold $10 billion in bonds to the United Arab Emirates central bank to alleviate worries it could default.
"I think it is unfortunate what is happening in Dubai," the Crown Prince added.
"And Dubai's growth was an opportunity for all of us here in the Gulf.
"I hope that with, I am sure their policymakers dealing with this crisis, they find success because this region needs to be strong for all of us to grow and prosper."
He said Bahrain had "certainly not unravelled like Dubai."
"I think our prudence and our conservatism has been tested, and while one can never see 100 percent into the future and predict everything and claim things that they shouldn't be claiming, I think I can say that I am very proud of what we have been able to achieve.