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OPEC head warns market instability may threaten future oil supply

On Tuesday, Brazil's state-run oil company Petrobras slashed its five-year investment plan. Photograph: (Reuters)

WION Rome, Italy Sep 21, 2016, 02.19 AM (IST)
The head of the Organization of the Petroleum Exporting Countries (OPEC) group warned against further cutbacks in investment by petroleum companies. 

In an effort to adapt to the falling price of crude, oil firms slashed their investment budgets by 26 percent last year. 

Mohammed Barkindo said a 22 percent drop was expected in investments this year which will pose a threat to future supplies. 

The OPEC secretary general said the market needs to be rebalanced and more severe cuts could leave the industry unable to meet rising demand in future years. 

Oil firms have been forced to cut prices from over $100 per barrel in 2014 to under $30 at the beginning of this year, before recovering to around $45.

The 14 OPEC states and Russia are due to meet next week, with Venezuelan President Nicholas Maduro saying they were close to striking a deal on limiting output.

On Tuesday, Brazil's state-run oil company Petrobras announced its plan to recover the company's financial strength, revising its five-year investment plan. 

New chief executive Pedro Parente said in a statement they will cut the investments by 25 percent over the next five years. 

"In the total five-year horizon this plan encompasses, we propose that the company will have been restructured, that it have unquestionable governance and ethical standards."

The new business plan projected investments at $74.1 billion from 2017 to 2021. 

(WION with inputs from agencies)
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