Crude oil prices for the Brent trade classification this week dropped to less than $100 per barrel for the first time since July. The OPEC basket price, a representation of the cartel's export grades, is less than $100 as well.
Ali Aissaoui, a consultant at the Arab Petroleum Investments Corp., told Bloomberg News that OPEC's top producer, Saudi Arabia, needs prices around $94 per barrel to keep its federal budget in check. Iran, meanwhile, needs a price per barrel of around $125 to keep its budget balanced.
"OPEC will definitely need to cut production to shore up prices as they can't produce at prices close to their break-even level," he said.
Ibrahim al-Muhanna, an adviser to Saudi Oil Minister Ali al-Naimi, in January fended off concerns that lower oil production was an attempt by Riyadh to influence oil prices. He said the kingdom was "strongly committed to a stable oil market."
OPEC, in its monthly report for April, said it revised its oil demand forecast for 2013 downward by 40,000 barrels per day to around 800,000 bpd but that's still higher than estimates from last year and indicates growth.