Oil price 'must stay above $60 a barrel'

6 July 2009

Oil prices must remain above $60 (£37.12) a barrel in order to encourage investment in future production, Kuwait's oil minister has claimed.

Sheikh Ahmad al-Abdullah al-Sabah told reporters on Sunday that prices are not currently being dictated by fundamentals, but rather by speculation and changes in the strength of the dollar.

US crude for August delivery fell to $65.65 a barrel on Friday - its lowest point in four weeks - as the rate of unemployment in the US reached a new 26-year high.

But while prices above $100 could hinder the global economic recovery, Sheikh Ahmad said the market should not be allowed to fall below the $60 level in the coming months.

He claimed that prices must remain above this point in order to ensure that Kuwait can at least meet its "budgetary requirements".

Home heating oil customers saw values reach 2009-highs of more than $73 a barrel at the end of last month, before prices began to retreat again over the course of the past week.

Indeed, the International Monetary Fund had previously suggested that the rally would be short-lived, claiming that speculation and sentiment "can affect prices but not for very long".

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