Oil prices won''t fall below $60 to $70 a barrel as this is the minimum level at which alternative fuels are economically viable, Saudi Oil Minister Ali al-Naimi said in remarks published on Sunday by Algeria''s APS news agency.
"From now there''s a line below which prices won''t fall," the official agency quoted him as saying in an interview with Petrostrategies magazine. He said this involved "the marginal cost of production of alternative fuels, whether that''s biofuels or tar sands" which had a threshold "between $60 and $70", APS reported.
"If you take into account all the subsidies involved in the production of a barrel of biofuels, I doubt whether anyone could make money from that with a price lower than $60 or $70," he was quoted as saying, referring to the price of a barrel of oil. He said that level signalled a line "under which the level of prices could not go".
US crude closed at $101.84 a barrel on Friday and London Brent crude finished at $100.10. Oil at these prices has piled pressure on the Organisation of the Petroleum Exporting Countries (OPEC) to refrain from cutting output when it meets in Vienna on March 5. APS said Naimi challenged the "Peak Oil" theory favoured by conservative energy analysts who predict that world supply of oil, including unconventional oil, will peak in about 2010. Naimi told Petrostrategies that continued exploration investment around the world would prevent the rapid exhaustion of supply.