OPEC will need to “step in” amid further declines in oil prices, which are fair at about $70 to $80 a barrel, according to the group’s second-biggest producer.

The Organization of Petroleum Exporting Countries could still hold back from intervening in the market for one or two years, Iraq’s Oil Minister Adel Abdul Mahdi said in an interview. Brent oil dropped about 20 percent since OPEC decided to maintain output at its November meeting in Vienna.

Global oil supply is growing as the highest U.S. output in at least three decades led to a glut that Qatar estimates at 2 million barrels. Saudi Arabia’s Oil Minister Ali Al-Naimi said Dec. 21 high-cost producers will have to make cuts if oil prices keep falling while the United Arab Emirates Energy Minister Suhail Al Mazrouei urged producers from outside OPEC to trim output. Iraq’s 2015 budget assumes a $60 oil price. 

“If prices keep falling to very low levels where the whole equation is not balanced, then definitely OPEC has to step in,” Abdul Mahdi said. He didn’t say if that means cutting production.

OPEC’s decision to hold production was taken after al-Naimi said the 12-nation group must protect its market share and let prices fall to trim output elsewhere, Abdul Mahdi said. “We accepted the Saudi theory to correct the situation in the market as it made sense to all of us,” he said.

The “fair price” of oil that was $100 to $105 a barrel is now closer to $70 to $80 a barrel, Abdul Mahdi said. Iraq’s cabinet two days ago approved a budget based on $60 oil. Global crude prices dropped about 45 percent this year, heading for the biggest annual decline since 2008.

Saudi Arabia, the group’s biggest producer, doesn’t plan to pump less “whatever the price is,” Al-Naimi told the Middle East Economic Survey in report published Dec. 22.

“We will fight for now as we have built financial reserves to help us stand longer,” Abdul Mahdi said. “We will surely not fight for a very long time but we can fight for a period of time.” (Bloomberg)