Qatar Oil Minister: Oil Price Should Stay Above $70

Oil should be above $70 a barrel to encourage investment in increased production capacity and avoid creating future supply crises, Qatar's oil minister said on Monday.

U.S. oil traded around $63 a barrel on Monday, having tumbled more than 50 percent from its July peak above $147 as the global economic slowdown eats into demand.

"Now what we are seeing is that the oil price went to a level that leads me to be concerned it will create another crisis in the short term or medium term for supply," Abdullah bin Hamad al-Attiyah said on the sidelines of an energy conference in Qatar.

"A price below $70 will not encourage companies and oil producers to invest," he told reporters.

Attiyah said expensive deep water projects and non-conventional projects such as oil sands in Canada were being delayed, as were refining investments worldwide.

"Under this scenario, future demand will face a shortage and there will not be enough investment to cope with demand increases," he said.

"None of us will invest in non-economical projects. The price needs to be above $70 or $75 to ensure producers will invest heavily to meet future demand."

Attiyah said it was too early to say if the OPEC group of oil exporters should cut supply at their meeting in December.

The Organization of the Petroleum Exporting Countries (OPEC) agreed at an emergency meeting on Oct.24 to chop production by 1.5 million bpd, or around 5 percent, to halt the price slide.

The cut has had little effect to date.

Iran's OPEC governor Mohammad Ali Khatibi told Reuters on Sunday that OPEC would cut oil output again if the trend towards lower prices and slowing demand growth were to be unchanged when the group meets in December.

Venezuela has already proposed a further cut of another 1 million bpd in OPEC supplies at the December meeting.

Qatar is one of OPEC's smallest producers and pumped around 860,000 bpd in October, according to a Reuters survey.

Attiyah said earlier this month that Qatar had cut crude oil exports to Asia by about 40,000 bpd from November, in line with OPEC's agreement to curb output.

Copyright 2009 Reuters. Click for restrictions.