The man in charge of selling Iraq's oil said Thursday it will take at least two years for crude prices to recover to $70-$75 a barrel, so bad is the global economic outlook.
Falah al-Amiri, head of the State Oil Marketing Organization, warned that the sudden downturn in the Chinese economy has compounded an already bleak situation with U.S. and European demand weakening.
"We need at least another two years to make the price of oil $70-$75 dollars," Amiri, an Organization of Petroleum Exporting Countries board governor, told AFP in an interview.
"Growth in China was supposed to be 9%, now they have reduced that to 4. America and all of Europe is in recession, especially Britain. The picture is gloom...the system is collapsing," he said.
Amiri said it is "for the ministers at OPEC to decide" on March 15 if production should be cut, but it is his personal view that prices will probably rise in the latter half of 2009.
"In the first part of this year the price will be less than $50, and in the second part it may be more than $50 but less than $55," he said. "In the next year probably a little bit more, up $5 or $10."
"China has a huge impact on the international market," Amiri said. "If it continues to grow it will affect demand because they always need oil," but warned if the "Chinese economy collapses" it would further weigh on prices.
Amiri also said it will be difficult to deal with surpluses that have built up in the international oil market in recent months, another factor that will keep prices down.
"There is a huge inventory in the international market," said the SOMO chief, whose organization is responsible for selling Iraq's oil to international markets, importing refined oil products for domestic use, as well as exporting non-refined products.
"The inventory should be about 52 days but at the moment it is about 57 days. This should be removed from the market, but if the international economy and the growth deteriorates further the surplus will be increased."