Bunker Prices Set to Head Lower as Saudi Arabia Says Oil Prices Could Stabilize at $60

Gulf producers are reportedly able to withstand oil at $60 per barrel.

Bunker prices could be set to head even lower as Saudi Arabia says it is now expecting oil prices to stabilize at around $60 per barrel, a level which other gulf oil producers and oil companies say they are able to manage, reports The Wall Street Journal.

Both WTI and Brent closed down and below $70 per barrel Thursday, at $66.81 and $69.64 respectively.

In fact, ExxonMobil Corp. CEO Rex Tillerson said this week that the company could withstand even a drop to $40 per barrel, reports CNBC.

"It really means a return to fundamentals for us," Tillerson said.

"It's important about watching your cash, watching your investment decisions, being very disciplined about everything, and then looking for opportunities that may present themselves in an environment like this."

With HFO bunkers historically priced at between 70 and 76 percent of the price of crude, $40 per barrel oil would price bunkers at major ports between $211 to $229 per metric tonne (pmt).

The Organization of the Petroleum Exporting Countries' (OPEC) decision to maintain its production ceiling despite collapsing oil prices also brought the price to a new five-year low this week.

According to unnamed sources, OPEC's lack of action is widely seen as Saudi Arabia's preference of short-term losses over losing market share in the long-term.

"The market will stabilize itself eventually," Saudi Arabian oil minister Ali al-Naimi had said previously.

A previous proposal had suggested a cut of about 2 million barrels of oil per day, the bulk of which would have been shouldered by OPEC, but about 500,000 barrels of which would have been expected to come from Russia and Mexico, who are not member countries but are major producers of oil.

However, Russia refused the deal outright, while other struggling OPEC members such as Iran, Iraq, and Libya argued that they should be exempt from any production cuts.

OPEC's decision is expected to come down hardest on the U.S., with some critics predicting a collapse in the American shale gas industry on par with the dot-com bust.