Crude prices have fallen below USD 53. Ali Samsam Bakhtiari of Samsam Bakhtiari Consultants and a retired NIOC expert comments on the oil scenario and whether the crude prices are to slide even further.

Ali Samsam Bakhtiari comments that OPEC is in a total disarray and the reason for the fall in prices is due to the inability to put its act together. A major reason for the disarray is that the founding members of the organisation  which include countries like Saudi Arabia, Venezuela, Iran, Iraq and Kuwait, are all in a turmoil, or don't see eye-to-eye, feels Bakhtiari.

Bakhtiari opines that it is difficult to predict the crude prices in 2007 as it depends on factors like the geo-political condition as well as on other factors.

Excerpts from CNBC – TV18’s exclusive interview with Ali Samsam Bakhtiari:

Q: The general consensus seems to have been that if crude falls below USD 55, OPEC (Organization of the Petroleum Exporting Countries) may actually call in for some sort of price cut but we understand that 10 production companies, 10 OPEC members, are actually supposed to face product cuts, actually pumped in about 380000-390000 barrels more per day last week. Now what sort of a level are you watching out for and how serious could this be?

A: First of all I believe that OPEC is these days in total disarray and the reason for price falling below USD 60 and now falling below USD 53 and may be falling below USD 50 very soon is that the organisation cannot put its act together. In December, it wanted to produce as per agreement 26.3 million barrels per day but produced 27 million barrels per day. I don’t think that in the short-term it can put its act together.

One of the main reasons is that among the five founding and most important member of the organisation, you have on the one side Saudi Arabia and Kuwait and on the other side Iran and Venezuela and in the middle you have Iraq. I will pass on Iraq; you have the headlines every hour or so on that country but the other two groups don’t see eye-to-eye at all. So how can they put their act together. But all this is very worrying for people like myself who look at the global scene because the oil industry, which is a very special and a unique industry in our small world has lost its safety net, which was the OPEC organisation, and losing your safety net might cause many problems in the very short-terms.

Q: Therefore in your estimates how would you see the prices panning out in the current quarter up til March before the summer demand creeps in and for the rest of 2007?

A: It is extremely difficult to make any prediction about the price of crude in 2007. But I could see it go much higher because in my opinion the peak of oil production in the world has been passed in the year 2006. The world will never be able to produce as much oil as it has produced last year. One of the sure signs that we have passed peak oil in 2006 is the price during the summer, which is 50% higher than it was during the winter. So predicting price for 2007 is extremely difficult and depends on many players as well as on the geopolitical problems that the world is facing today.